AAII's Equity-Cash Allocation Spread At Widest Level Since 1998-2000 With Margin Debt 0.7% Below Its Real All-Time High

First, here's the most recent data from the December AAII Asset Allocation Survey via AAII's blog on January 2, 2013:

Equity allocations among individual investors reached their highest level in 6 1/2 years last month, according to the December AAII Asset Allocation Survey. At the same time, fixed-income allocations fell to their lowest level in 4 1/2 years and cash allocations fell to a three-year low.

Stock and stock fund allocations rose by 4.1 percentage points to 68.3%. This is the largest allocation to equities since June 2007, when stock and stock fund allocations reached 68.6%. December was also the ninth consecutive month, and the 11th out of the past 12, with equity allocations above their historical average of 60%.

Bond and bond fund allocations fell 2.1 percentage points to 15.2%. This is the smallest fixed-income allocation since May 2009, when bond and bond fund allocations were 14.2%. December was also the first time in the past 54 months when fixed-income fund allocations were below their historical average of 16%.

Cash allocations fell 2.0 percentage points to 16.5%. This is the smallest allocation to cash since November 2010, when cash allocations were 15.9%. December was also the 25th consecutive month with cash allocations below their historical average of 24%.

Equity allocations rose from 68.1% in October to 68.3% in December. If you look at the historical chart, you can see that equity allocations bounced off 70% multiple times during the 2003-2007 cyclical bull market. They even hit close to 80% before the market peaked in 2000. But, with AAII's equity-cash allocation spread at its widest level since 1998-2000 and real margin debt 0.7% below its July 2007 high (or at record highs in nominal terms), the stock market will probably crash if investors decide to deleverage and rebalance their portfolios into cash all at once. Who knows what the catalyst will be, but I'm sure the Fed's liquidity pedal will be part of it.

More related data:
*Investors Haven't Been This Bullish Since The Market Peaked In 2007 (John Hussman, NAAIM)
*S&P 500 Stock Buybacks at Their Highest level Since the Fourth Quarter of 2007 (S&P)
*A Year In Venture Review: 2013 Had The Most IPO Exits Since 2007
*Jordan Belfort's Boiler Room vs. Today's Systemic Pump And Dump Scheme
*Robert Shiller is "Worried About the Boom in the U.S. Stock Market" (December 2013)
*Hussman: The S&P is Overvalued Based on the Shiller P/E, Price/Revenue Ratio, and Market Value of Non-Financial Stocks/GDP (Charts)
*A Big Reason Why 2013 Stock Prices are in the Stratosphere - Chart via Elliott Wave International
Recommended posts powered by Google