Expectations adjustment

The retail investor in the US hasn’t capitulated yet according to #AAII. Their equity holdings are close to maximum, cash levels are relatively low and fixed income holdings have not decreased meaningfully. It would appear as if they’re waiting for a market rebound or a reversal of the #fed tightening policy. Unfortunately, when we look at past crisis, recessions or economic downturns, the market provides such a level of pain, that investors are forced to sell/reduce risk, and the new Investment cycle begins. We’re not there yet. If we get confirmation from data that the US economy is slowing down or even worse entering a recession, investor’s fear will rise, equity holdings will decrease and cash levels will increase.

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