Content area
Full text
The investments that the world's top money managers liked the most a year ago ended up doing worse than the investments they liked the least.
Stop me if you've heard this one before.
The eight investments that were most "overweighted" by the world's big money managers, as highlighted here in January 2024 , ended up generating a 13.5% return over 2024.
Meanwhile, the investments that they were shunning, the biggest so-called "underweights," earned 16.7%. You can either call that 3.2 percentage points better or 24% better, depending on how you view it.
The gap was even bigger if you measure it not simply over the calendar year, but over the period between the publication of MarketWatch's article on Jan. 16, 2024, and today. During that stretch, the eight investments that money managers favored the most earned 12.8%, while the eight they hated the most earned just over 20%.
That's a quick summary of where we stand as … drumroll, please … we unveil our annual update for Pariah Capital and the outlook for the year ahead.
For new arrivals, Pariah Capital is a tongue-in-cheek exercise I launched a few years ago . It was inspired by the monthly BofA Securities Global Fund Manager survey. BofA surveys hundreds of the world's leading money managers, both in the U.S. and around the world — mutual-fund managers, pension-fund honchos and so on. In total, these folks are in charge of about $600 billion of investments. BofA asks them what they like and hate the most in the markets, where they are placing their biggest bets, and what they are avoiding. It's the single most authoritative guide to "conventional wisdom" in the financial C-suites.
I've been following this survey for about 25 years. And over time I started to notice a funny pattern. The assets where these guys were most overweight often tended to fall flat.
Whether it's U.S. tech stocks, European stocks, Japanese stocks, emerging markets, bonds or commodities, these guys seem to be the most bullish when the assets are at the peak and most bearish when they are at the bottom.
When gold GC00 was just $260 an ounce, it was so out of fashion that nobody even talked about it. Not until...