• Why It Pays To Bet Against Pension Funds

    by  • June 19, 2013 11:04 am • Broad Market Analysis, Quick Hits • 0 Comments

    Pension funds and large institutions have historically been horrific market timers.  Now, market timing isn’t their job, still, they tend to be overweight or underweight at the worst times.

    They had record exposure to equities in 2000 and they’ve missed a big chunk of this record multi-year rally.  In fact, this is the first time ever the SPX has been up three straight years and pension funds have actually lowered their allocations to equities.

    Now here’s a great graphic that shows US Institutional Asset Allocations from Pensions & Investments.  Allocations to stocks is at its lowest level since 1992 and bonds have a huge proportion of the overall allocation.

    Lastly, check out Other, which checks in at 5.2%, its highest since 1992.  I’m taking a guess a big part of that is gold.  The same asset that has dropped nearly 20% this year.  Further proof this isn’t a group you want to mimic.

    Longer-term this bull market is alive and well.  Sure, we’ll have pullbacks and periods of choppiness, but to see how the big boys are still missing out on this rally is very bullish from a contrarian point of view.

    Source Pension & Investments


    Ryan Detrick is the Senior Technical Strategist at Schaeffer's Investment Research in Cincinnati, Ohio. He joined Schaeffer’s in 2003 and is a frequent speaker and writer on stock market and economic issues and is widely sought after by financial media for his expertise and commentary. Mr. Detrick is a common guest on CNBC, Fox Business, and Bloomberg Television and has been quoted in outlets such as The Wall Street Journal, BusinessWeek, USA Today, Reuters, the Associated Press, and others. With a decade of financial industry experience in the investment and financial services area, strengths include short-term trading with an eye toward timely technical- and sentiment-based trading opportunities, and advanced option trading strategies. Mr. Detrick received a BA in finance from Xavier University, an MBA in finance from Miami University, and has earned his Chartered Market Technician (CMT).


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