Investors Ignore Gloom, Keep On Buying --- They Fear Missing Rise, Manager Says
Investors may be talking bearish, but they're still walking bullish.</br></br>During the past two months, the level of negative sentiment -- at least as articulated by the assorted seers and chin-scratchers on Wall Street -- has grown noticeably. Strategists bullish throughout 1995's impressive stock market run have grown increasingly skittish about the market's prospects for the rest of this year. Among the reasons bearishness is so in vogue: speculative movement among small stocks and an overly aggressive investor lust for initial public offerings of any kind.</br></br>But at the same time, even as the talk grows more pessimistic, the folks with the hard cash continue to remain, well, fairly bullish. Mutual fund cash inflows are powerfully strong. Cash levels among institutional investors are stuck at aggressively low levels. Money managers, while nervously talking about rising interest rates and stretched valuations, continue to deploy new assets into the stock market. And analysts' estimates for 1996 earnings for Standard & Poor's 500-stock index companies have risen in four of the past five weeks, according to I/B/E/S International Inc., a research firm in New York.</br></br>"People are talking a lot about being more nervous, but I sure don't see it reflected in the stock prices," says Barbara Marcin, senior equity portfolio manager at Citibank Global Asset Management. "Part of the problem is that people are afraid of being out of the market. Though investors are talking more pessimistically, the one thing we've learned during the past year and a half is that being in cash is not the place to be."</br></br>Yes, holding cash can be deadly, which might explain why it's easier to try to call a market top than it is to move investments to reflect such sentiment. Jeffrey Vinik, late of Fidelity's Magellan Fund, learned the hard way that playing defense in this market can be immensely unrewarding. And many of the most outspoken and nervous bears concede that they have felt nervous and bearish for a long time.