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2025-12-16 19:10:36
[Cash Shortage, Crowded Trades and Tail Risks Amidst Extreme Market Greed] ⑴ Bank of America's December global fund manager survey showed that respondents' average cash holdings fell to 3.3%, a record low, down from 3.7% previously. ⑵ Meanwhile, investors' allocation to stocks and commodities rose to its highest level since February 2022. ⑶ The survey indicated that global investor bullish sentiment reached its highest point in the past three and a half years, driven by fervent macroeconomic and policy expectations. ⑷ However, this extreme optimism harbors hidden risks; a staggering 54% of respondents considered "going long on the seven major tech giants" to be the most crowded trade in the market. ⑸ "Going long on gold" ranked second among the most crowded trades with 29% of the vote, reflecting the accumulation of large long positions in safe-haven assets. ⑹ Regarding the biggest tail risks in the market, investors' primary concern is the potential bubble in the artificial intelligence sector, followed by disorderly rising bond yields. (7) Cash levels have fallen to rock bottom, coupled with highly concentrated trading positions, indicating that market sentiment has entered a period of extreme greed, reducing its ability to buffer against potential shocks.
