Don’t do anything about your 401(k) until Tuesday

If they’ve wholly bailed connected stocks — buy!

But if they haven’t, you mightiness privation to deliberation twice. Or adjacent 3 times.

It hasn’t adjacent been a period since money managers told BofA Securities that they were eagerly buying U.S. stocks with some hands, adjacent though they besides said the marketplace was wildly overvalued. As this file pointed retired astatine the time, this was evidently insane.

Since then, the Dow Jones Industrial Average DJIA has fallen astir 4,000 points. The S&P 500 SPX has fallen 8%, adjacent including the latest bounce, portion the Nasdaq Composite COMP and the Russell 2000 small-cap scale RUT person fallen conscionable implicit 10%. The alleged Magnificent Seven MAGS radical of tech stocks — Apple AAPL, Amazon AMZN, Alphabet GOOG, Meta META, Nvidia NVDA, Microsoft MSFT and Tesla TSLA — has fallen astir 15%.

Someone who responded to the survey by betting against the money managers and purchasing the Direxion Daily S&P 500 Bear 3X Shares exchange-traded money SPXS would person made 30% successful a fewer weeks. Booyah!

The money managers’ survey is simply a almighty magnetic south, oregon contrarian indicator. When these money managers are overinvested successful stocks, it is mostly a bearish awesome — and vice versa.

The money managers’ survey is the ground for this column’s regular “Pariah Capital” feature, wherever we item the assets that the big-money investors don’t privation and don’t own. These often beryllium to beryllium terrific investments.

If the adjacent survey shows that money managers person turned cautious, this offers astatine slightest immoderate country for the marketplace to find a floor, adjacent if temporarily. Once the large wealth has already sold its stocks, it has little country to bail further.

None of this, though, needfully addresses the longer-term issue.

The S&P 500 scale of U.S. stocks presently sells for 20 times the forecast per-share net of the adjacent 12 months. Or, to enactment it different way, for each $100 you put successful the index, you tin expect $5 successful after-tax net implicit the adjacent 12 months, a 5% yield.