What makes a fund manager or strategist flip from bullish to bearish, or from bearish to bullish? I suppose many of them have their own criteria or 'systems' that trigger a change in approach. Some even follow the charts/technicals to a certain extent. But the smartest and most successful managers often get ahead of the curve, pulling out of positions before the big tumble or loading the boat before the market surges.
It's no accident some of the best managers showing robust returns are the envy of the investing business. We listen closely when Warren Buffett speaks because, well...he's the GOAT (greatest of all time). Other big names come to mind like David Tepper, Ray Dalio, and Stan Druckenmiller. Big time investors like Mark Cuban, Paul Tudor Jones, and Sam Zell have untouchable track records.
What do these investors all have in common? They have recently shown a distaste for the stock market in general. At a time of great uncertainty, where these investing generals usually took their greatest risks in the past and made their fortune - they are stepping back.
I'm not quite sure the reason, but there are a multitude of them - overvalued market, entering another great depression, extremely loose money policy, no containment of the coronavirus, economy not opening up, and the the global economy brought to its knees.
But if you have survived the market crash of 2020 and come out the other side, you have noticed something has changed. The Fed is ever present and providing massive liquidity while the government is stimulating via fiscal policy. While we know throwing money at the problem won't always work, in this case there is a massive life raft being tossed into the sea, to catch anyone who needs a bailout.
Back to the fund managers who seem to shy away from this market. The stimulus has set up a perfect stock picking environment for which these masters have made their best plays. Yet, they tell everyone to avoid the markets as they are doing. Meanwhile, the markets race higher, close enough to all time highs (20% away - really?) that we might not see a retest of those March lows.
Anything goes, but I suspect the longer markets stay elevated here, the sooner these 'geniuses' will get off the sidelines and start buying stocks again. If the opportunity is there, no need to be inactive. Bears make money, but long time bulls do far better. No sooner will we hear them claim, 'oh yeah, I've been bullish all through this - weren't you?'