Schizophrenic behaviour patterns mean odds are on for nasty reversal

At the moment I would suggest a great many virtuous fund managers have got their caution towards the euphoric stock markets about right. A couple of weeks back I could turn to almost any page in the news section of this fine paper and find a sensible fund manager cautioning that a correction is on its way.

Two solid examples from the 17 August issue should suffice: Miton’s ever-thoughtful Martin Gray suggested that a correction down to 3,500 was perfectly possible and he was happy at a 44% cash position, while Bob Doll, CIO over at BlackRock, reckoned the S&P could still hit 1,250 and then tumble back to between 850 and 950 (see page 16). Clearly this gaggle of managers warning of imminent problems are still a minority among an ever-growing army of China, multi-asset and emerging markets bulls but I think the odds are on a nasty reversal in the next few months. On virtually any measure of ...