Ask a Chartered Financial Analyst

 | Feb 08, 2013 | 10:00 AM EST
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The best barometer of investor sentiment is always the stock market, of course, but occasionally we do look at other surveys to support or refute our own thesis. Recently, the CFA Institute canvassed its membership to get an understanding of their outlook for the coming year. It published the results in its CFA Institute Global Market Sentiment Survey 2013. With 110,000 members who represent most of the developed world, the survey is a great adjunct research source that should reflect the thinking of the investment industry as a whole.

The CFAs can best be described as "cautiously optimistic." Roughly 40% expect the global economy to expand this year, with 20% in the contraction camp. (The rest were undecided.) The 40% view of expansion is up from 34% last year, indicating a creeping optimism. Surprisingly, the Europeans are the most optimistic, with 50% of their membership expecting expansion.

For a couple months, Americans thought the European debt crisis had gone away, but it is rearing its ugly head again. Among the CFAs, 37% thought the crisis would continue to be the highest risk to growth this year. Only 23% think the crisis will ease, while 78% think it will remain the same or worsen.

The group is more bullish on equities than the economy, with 50% expecting equities to be the best performing asset class. (So far, so good!) This is up from last year. A meaningful minority of 38% expect either precious metals or commodities to be the best performer. No one really likes bonds or cash. While they were not surveyed on inflation, this asset allocation is consistent with playing increasing inflation.

Interestingly, the Americans are more bullish than some emerging markets participants. Both the Chinese and Brazilian CFAs have very small groups that are most bullish on equities.


Bullish on equities
Source: CFA Institute


Overall, the industry members are saying they feel bullish at the moment -- somewhat for the economy, but more so for stocks. Take it under advisement!



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