The Current Market
Max Salk and his peers may see that investors seem to be less exuberant than they were in 2007 and 2008. It seems as if investors are more interested in pulling capital out and allocating it toward classically safer investments such as fixed income instruments instead of traditional equities.
Equity fund outflows are a signal to watch and see. An organization conducted a survey called the AAII Asset Allocation Survey. This survey showed that there was a slight increase in allocation to cash and an overall decrease in capital allocated toward equities.
Investors seem to be continuously scared of potential issues that may obvious yet unseen in the stock market. Issues such as the trade war with China, the potential rise of consumer and corporate debt, in addition to other issues within the market and the economy have investors sitting back and becoming more passive in how they want to approach their investing.
As stated, there was a slight decrease in allocations to equities and equity funds. But this is still not a reason to panic as stock allocations are still at higher levels than in the past. The bond fund allocations might have captured the decrease in equities as it is said these rose up by a bit higher than 1%. Cash allocations have also risen slightly. Despite these changes, investors are still moderately bullish on these stocks and indicate that they would still purchase stocks if they had the necessary capital to do so.
Investors are looking at dividend growth stocks, bonds, cash, and other investments that may be safe. The reasoning is that if a correction were to come, they would be prepared to scoop up stocks at a lower price and have bigger returns.
It is certain that Mark Salk and his peers are looking at how this will affect their holdings and their analysis over the short term and over the long term.
Max Salk and his partners will have to look at how corporates think about the current markets and how they will act in regard to issuances of debt, whether it will be short term or long term. They will also look at how corporates will use their current dry powder (their cash) to increase their valuations and treat investor capital.