For the past three years, we have consistently said that the BofA Fund Manager Survey (FMS) is the most incongruous combination of zero signal and ample, schizophrenic noise, a "survey" in which the respondents answer not what they are actually doing, but what they would like to be doing or perceived as doing, and failing that, what they think is the right answer even if two consecutive replies may be diametrically opposing and make zero sense taken together (alternatively, it feels like every FMS respondent is a pathological liar and nobody actually tells the truth about what they are doing either out of paranoia or, well, because they are pathological liar).
Which is also why we have urged readers to at most spend just a few minutes each month on the cacophonous orgy of noise that is the BofA Fund Manager Survey, which not only has zero signal but has zero correlation to the market. It does, however, correlate to itself and any time sentiment turns overly euphoric or apocalyptic, that's the hint to take the other side in the market. A good example of this was August 2022, when FMS organizer Michael Hartnett said that Wall Street's "Mood Was No Longer Apocalyptic", and therefore he recommended shorting the S&P just as the S&P hit the highest level for several quarters (he was spot on, as that proved to be the high point for US stocks when proceeded to tumble into a bear market and remained depressed until almost a year later, or May 2023, when the AI bubble took over and sent stocks to fresh 52-week highs).
Fast forward almost a year ahead, when last October - just as stocks hit a multi-month low - Hartnett, who had previously been very bearish, turned bullish because as the BofA CIO warned looking at that month's Fund Manager Survey, "investors have turned bearish again." To which we said that "those who always correctly fade the FMS (and shorted the market one month ago when the mood turned ridiculously bullish), may be just the right time to go long, and Hartnett confirms as much, commenting that the "BofA Bull & Bear Indicator at 2.2 = close to buy signal" and a FMS Cash Rule (>5%) = buy signal."
