The over-invested portfolio manager is one of the recent refrains [citibank research capital markets] $SPY

Quoting Macro…

“Recent equity market strength is facing determined opposition: While a longterm secular bull market is still a ways off, in our opinion, shorter-term meaningful stock index surges are very plausible and are consistent with the Trading Places thesis initially introduced in 2001 and reiterated regularly since. Nonetheless, an intense campaign of skepticism remains in place with various statistical data points being cited as proof of an excessively positive Street consensus that is overlooking many problems. Indeed, in the last few months, investors have witnessed Southern European fiscal woes, an everwidening budget gap in the U.S., stubborn unemployment and waning consumer confidence, to name a few over-arching concerns.”

— Tobias M. Levkovich

•  Recent equity market strength is facing determined opposition. While a longterm secular bull market is still a ways off, in our opinion, shorter-term meaningful stock index surges are very plausible and are consistent with the Trading Places thesis initially introduced in 2001 and reiterated regularly since. Nonetheless, an intense campaign of skepticism remains in place with various statistical data points being cited as proof of an excessively positive Street consensus that is overlooking many problems. Indeed, in the last few months, investors have witnessed Southern European fiscal woes, an ever-widening budget gap in the U.S., stubborn unemployment and waning consumer confidence, to name a few over-arching concerns.

•  The over-invested portfolio manager is one of the recent refrains. The liquid asset ratio for equity fund managers has dropped to 3.6% from near 6.0% one year ago and that is being highlighted by equity market bears as evidence that the professional investment community has become overly bullish, even as 80% of the ratio’s shift has come as the result of a near-70% equity market rally rather than a dramatic decline in cash holdings. Essentially, one has to understand the impact of the denominator on a calculated ratio before jumping to conclusions.

US Portfolio Strategist 4