ACTV - Household Equity Allocations Suggest Caution

2024-03-15 16:30:00 ET

Summary

• Household equity allocations are again sharply rising, as the “Fear Of Missing Out” or “F.O.M.O.” fuels a near-panic mentality to chase markets higher.
• While the market corrected in 2022, the reversion needed to reverse the excess deviation from the long-term growth trends was not achieved.
• The reality is that the next decade could be a disappointment to overly optimistic expectations.

Household equity allocations are again sharply rising, as the “Fear Of Missing Out” or “F.O.M.O.” fuels a near-panic mentality to chase markets higher. As Michael Hartnett from Bank of America recently noted:

“Stocks are up a ferocious +25% in 5 months, which has happened just 10 times since the 1930s. Normally, such surges occur from recession lows (1938, 1975, 1982, 2009, 2020), but, of course, we did not have a recession in 2023, according to the Biden administration. These surges also occur at the start of bubbles (Jan’99).”

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