Investor sentiment most bullish in two years: BofA survey

Investor sentiment is currently at its most bullish level since January 2022, according to Bank of America's February Global Fund Manager Survey. Yahoo Finance Markets Reporter Josh Schafer highlights how true this figure is and what factors could be contributing to this trend, including Big Tech investments.

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Editor's note: This article was written by Luke Carberry Mogan.

Video transcript

RACHELLE AKUFFO: Bank of America's February Global Fund Manager Survey is out, and the results are pointing to more bullish investor sentiment ahead. Yahoo Finance's Josh Schafer joins us at the desk with some of the takeaways. Where are we seeing the tide turning here?

JOSH SCHAFER: Yeah, Rachelle. I mean, broadly, we're seeing the tide turning right as you hinted at their. Overall investors more bullish here, the most bullish they've been in about two years. But it's interesting when you take a look at the overall investment sentiment chart from Bank of America.

Investors are the most bullish they've been in two years, but when you look at that broad span we see there, they aren't nearly as bullish as other periods where the market may have really gotten ahead of itself, which I think is sort of an interesting perspective thing. It's another form of sentiment-- we talk a lot about this with consumer sentiment-- that hasn't really come all the way back since the pandemic, and people have just been so negative that yes, we're seeing more bullish here, but when in comparison, it isn't quite actually that bullish.

I want to dig into a couple of the things here, guys, of why people are so bullish, right? One of those things is that recession call. We know a lot of Wall Street banks have been pulling their recession calls over the last couple of months. Deutsche Bank was the latest one to do it last week.

And then you take a look here, for the first time since April 2022, we have investors saying that they don't expect a global recession. Interesting to highlight the word "global" there because we know the US economy, a lot of people feel like, is doing well. That is not necessarily the case of how people have felt broadly about, say, Europe or something like that. So I found that to be interesting. And a few other things to hit on here, guys, cash allocation finally coming down.

BRAD SMITH: So, is it clear as well where there's perhaps more of an outsized sentiment for even this bullish tenor that's prevailing right now within the markets?

JOSH SCHAFER: I know you guys know the answer because we've looked at it before the show. But if you had to guess, you probably would have guessed tech, right?

BRAD SMITH: Yes.

JOSH SCHAFER: Yeah. And it is tech. It was very interesting, I guess, to see in some ways like, of course, right? It makes sense. But investors very bullish on tech right now, the highest allocation since August 2020. Again, I like to compare this to different times, right?

And then think about where we are there. I thought it was interesting. It was August 2020 instead of, say, 2021, right? We talk a lot about the quick bubble we saw in 2021 and different people buying in. So interesting to see investors really bullish on tech.

They're curious to see if this starts to shift at all as we, of course, talk about the broadening of the market and if it's ever going to come every day. Eventually, does this chart start to move a little bit, I think, will be interesting. But for now, people still love tech.

RACHELLE AKUFFO: So did we get any more hints about how long the Magnificent Trade Seven last before it either needs to broaden out to sort of lift all of the boats to where some of these estimates are looking?

JOSH SCHAFER: People are certainly all in on it based on the charts that we saw here, right? They called it-- Bank of America called it, quote, "overcrowded." But I think really, when you think about what strategists have sort of been telling us about that Mag Seven trade right now, is it depends on what stocks we're talking about within the Mag Seven, right?

Because we've sort of become bifurcated in a little bit where you talk about a Tesla, maybe even Apple, slumping a little bit to start the year. But some of these companies like Nvidia or Microsoft, Meta, Amazon have done so much better that you're really starting to see those groups separate. And then I don't know, maybe the Mag Seven trade gets less crowded, but the Mag Four trade gets more crowded.