Still, there’s evidence that high stock market participation across American households doesn’t bode well for the market. Current equity holdings are comparable to peaks in 1968 and 2007, and returns 10 years after high degrees of participation are “generally poor,” analysts at Ned Davis Research Inc. wrote.
“Our wealth advisers who deal with individual investors have struggled to get their clients into the market,” Ed Clissold, chief U.S. strategist at Venice, Florida-based Ned Davis Research, said by phone. “That’s been a part of the market that hasn’t participated as much in the rally. Now that they’re getting in more, and getting more fully invested, that means less potential future buying.”
It’s happening as other investor types shy away from the market. Macro hedge funds have decreased their exposure to stocks and bonds while maintaining positions in the dollar and commodities in 2017, according to a the Bank of America report.
At the same time, insider buying among corporate executives has slowed. About 2,300 insiders bought shares of their companies in the past month, down from a one-year high reached at the start of the month, data compiled by InsiderScore show.
The seemingly endless appetite for corporate buybacks is also showing sings of ebbing, with U.S. firms purchasing 6 percent less last year, the biggest yearly drop since 2009, according to S&P Dow Jones Indices.
“We’ve increased our equity exposures a little bit as signals turn more bullish,” said Matt Chancey, an independent financial planner at Orlando, Florida-based Chancey Wealth Management, who helps oversee about $50 million, said by phone. “Our clients are happy their accounts are going up. You’ll never have a client calling you at the top of the market saying, ‘I’m ready to get defensive and go into cash.”’
This article was provided by Bloomberg News.