Weekly Recap & Outlook – 02.08.13

Tower Private Advisors

A really short one this week…


Everything’s okay as long as everything’s okay. Well, it’s not as poetic as c’est la vie (such is life) or que sera, sera (what will be, will be), but Europe looks okay so long as Europe looks okay, which is to say it ain’t fixed yet. Yields rose and stocks fell in Spain and Italy, as the former reeled from allegations that senior government officials benefited from some sort of slush fund; in the latter, crackpot Silvio Berlusconi’s surge in PM polls upset markets there.


In the U.S., markets shrugged off those worries, with only the S&P 500 declining on the week, and that just barely. Here, we are awash in enthusiasm. Stocks saw record inflows in January, and there is increasing talk of investors finally coming back to equities. Unfortunately, January is always a big month for equity inflows, and this January was probably an exceptional one, as investors who rushed to sell before the inevitable fiscal-cliff induced capital gains tax rate increase now were flush with cash to invest. It’s likely that the record inflows reflected some of that reinvestment.

One survey, conducted by the National Association of Active Investment Managers showed a record level of enthusiasm for stock, as is shown below. It showed managers 104% invested, meaning they were using leverage to get additional exposure. That was last week. This week’s survey showed a drop to a still-quite-elevated level of 94% invested. What I didn’t see mentioned regarding the survey is the near-record drop in the number of participants that week. Maybe that left the lunatics running the asylum–and it’s not to deny that enthusiasm is running quite high; it is.


Graig P. Stettner, CFA, CMT
Chief Investment Officer
Tower Private Advisors


One Response to “Weekly Recap & Outlook – 02.08.13”

  1. Larry Dent says:

    Some years ago one of the financial “Kings” in our gov warned about unfounded enthusiasm, or unintended acceleration or something like that. Seems like we are sailing the same boat of late. I did not rush to sell before the financial cliff (sell low), so I am not rushing to buy during this unintended whatever (buy high), but even so I don’t have much confidence in our economies underpinnings right now. Even in good times some crooks on Wall Street seem to manage to screw things up and never go to jail. Strange!!!

    Hope I am wrong.

    Larry Dent

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