Full Capitulation Could Mean Opportunity Knocking

Capitulation Time

People are negative. Really, really negative. Now, the question is whether that could conceivably be a good thing.

It’s very unusual for big fund managers to be overweight in bonds relative to equities, and suggests deep negativity about the immediate outlook for the economy. And yet the latest edition of Bank of America Corp.’s monthly survey of global fund managers finds that they are now more underweight in stocks than bonds than at any time since March 2009, the month the stock market hit bottom after Lehman Brothers collapsed:

At one level, this is awful. The people who deploy assets for the long term think it’s better to lend to the government (at what are still very low rates) than take a share in the profits of growing businesses.