JEFF SAUT: RALLY EXTENDED, BUT PORTFOLIO MANAGERS PLAYING CATCH-UP
Jeff Saut of Raymond James remains confident that the rally has legs due to the need for investment managers to impress investors as their fiscal year comes to a close. The pressure is on to catch-up with the averages:
The call for this week: In last week’s “Call for this week” we wrote, “With the Pros’ return we should get a better idea of the stock market’s near-term directionality. Our sense is they will show up in ‘buy ‘em’ mode since stocks just won’t go down and the Pros are staring at their October fiscal year.” And, they did just that as, “each competitor has (been forced) to pick not those faces which he himself finds prettiest, but those which he thinks likeliest to catch the fancy of the other competitors, all of whom are looking at the problem from the same point of view.” The important point is that although this runaway rally is extended, the supply/demand, and sentiment situation, is still favorable. So while the “music” may pause this week on worries the U.S. tire tariff being imposed against China using the “safeguard mechanism” agreed to under China’s WTO entry conditions, the “music” is likely not going to stop.
Read his entire analysis here.
FWIW, I like Saut’s reasoning here in the short term. But possibly the low insider buying and lower short interest indicate a decline in the mid term.
what about managers who are beating the market already and just want to index the rest of the year to capture the alpha…you know…there are portfolio managers who were buying in February and March who actually have made some nice returns
I’ve been hearing this same argument since late Spring. It’s getting old. Also, I thought Merrill’s Monthly Manager Survey showed they were “all in” (http://www.ritholtz.com/blog/2009/08/merrill-lynch-global-fund-manager-survey/).
MARKET QUOTES
THIS WEEKS MOST POPULAR STORIES
MARKET NEWS