Market sentiment is at a low ebb – is it time to buy?

Fund managers feel as pessimistic now as they did in 2008 and early 2020. So is it time to fill your boots?

Stressed stock trader
Fund managers are feeling down
(Image credit: © Mark Lennihan/AP/Shutterstock)

Sentiment is a useful thing for investors to keep an eye on. The logic behind this is that markets are driven by expectations. As a result, if sentiment is at an extreme – either bullish or bearish – then there’s a good chance that markets are at a turning point. Why? Because if everyone is a bull, there’s no one left to buy. And if everyone is bearish, well, things can only get better.

With this in mind, the latest monthly survey of global fund managers from Bank of America (BoA) is quite the eye-catcher. It reveals that global fund managers are pessimistic to an extent only seen at periods of extreme investor stress, such as the Lehman Brothers collapse of late 2008 and the peak of coronavirus chaos in spring 2020.

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John Stepek

John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.