Sanguine Thoughts on U.S. Shares

 | Mar 28, 2012 | 10:30 AM EDT  | Comments
  • Comment
  • Print Print
  • Print

The CFA Institute recently polled its broader membership to get a sense of the market sentiment. The sample of 2,500 represents a solid cross-section of the folks that are managing most of the money invested around the world, since CFAs have grown to dominate the population of investment practitioners. The results of the poll are instructive regarding what the investment community is anticipating for 2012. What did they find?

Top of mind for investors is "systemic disruptions," the words CFA Institute uses to characterize the credit crisis in Europe. Approximately 36% of respondents figure this to be the principal concern this year, indicating that a solution to Europe may not be "in the stock market" quite yet. (A similar number note that more regulation or supervision would be a good thing this year.) The panel believes the impact of the credit crisis will last three to five years. A noteworthy 25% believe the crisis will stretch out for the next five years!

The sample also ranked expected returns by asset class, and they believe non-equity asset classes will outperform equities this year. The equity pessimism is driven by both the system risks mentioned before, and a general perception that economic performance will be subpar. The leading candidates for outperformance this year are precious metals (read: gold), commodities and bonds. An amazing 9% believe cash is the best bet, indicating a minority of hardcore bears that still inhabit this market.

That said, when asked which equity markets will generate the best returns, more than 50% of the CFAs cited the U.S. This is a relatively bullish sign for the U.S. markets, with the caveat that we do not know if there is "home team" bias in that voting. In fact, only in the U.S. did a majority think their home market would be a positive performer. In the other regions (Europe, Asia and so on) only minorities of respondents thought their home markets would be top performers. The U.S. respondents were also most adamant about companies paying dividends.

In the U.S., it seems, cash is king -- at least for stock investors!

Columnist Conversations

If you missed my latest on IBM.... Not only are analysts confused, but one calls out the company for playing a...
Lang:
Tuesday saw a massive reversal on Twitter stock that definitely caught my eye. Take a look at the chart below...
Boardwalk Pipeline Partners(BWP)is jumping pre-market. Bid ask $15.43 - $15.50, last trade atthe ask. + 3.06% ...
Market posts the third day of solid gains in a row. Will see if we can make it four a row before the long hol...

BEST IDEAS

REAL MONEY'S BEST IDEAS

Columnist Tweets

BROKERAGE PARTNERS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.