us equities - worlds most overvalued

Well that is the opinion (for what it is worth) of 57% of surveyed fund managers

Pessimism toward US equity markets deepens
Wednesday, 15 September, 2004 Print
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Pessimism toward US equity markets has deepened, according to Merrill Lynch's September 2004 Survey of Global Fund Managers, with 57% of fund managers rating it at the most overvalued in the world, up from 51% in August 2004.

The survey also shows that fund managers remain concerned about inflation and continue to anticipate higher interest rates over the next year.

However, David Bowers, chief global investment strategist at Merrill Lynch, said that despite expectations of central banks tightening into a global slowdown, institutional investors have not adopted a classic defensive stance. He said managers are aware cash levels remain high and could be put to work in equities before year-end. Cash positions remain at about 4.7% of assets, marginally down from 4.8% in August.

As a result of the low level of volatility and general uncertainty about the global macro outlook, fund managers increasingly prefer companies to return cash to shareholders, for example through share buybacks or increasing dividends.

Bowers said the return of cash to shareholders is starting to establish itself as a theme, as although investor sentiment appears resilient, fundamental doubts remain.