A Stock Pickers Market?--
Investors pile into single stocks, with tech a big beneficiary - BofA
Oct. 25, 2022 7:27 AM
Inflows into single stocks are at historic highs, with BofA clients being net buyers of stocks for the third-straight week, strategists said Tuesday.
Hedge funds were the main buyers, while retail investors bought for the fourth-straight week, but institutional clients (and Jim Cramer) sold,
"Over the last three weeks, inflows into single stocks (as a % of S&P 500 (
SP500) (NYSEARCA:
SPY) mkt. cap)
were in the 99th percentile of history since '08 and two standard deviations above average, and still in the 92nd percentile excluding corp. client buybacks," they said.
"Prior times 3-wk. single stock flows as a % of mkt. cap were this extreme were followed by
above-avg S&P 500 returns over the subsequent
1/3/6/12 months (i.e. wasn’t a contrary indicator)," Hall and Subramanian added. "But as a caveat, most prior instances of extreme (+2 st. dev.) inflows following the Global Financial Crisis typically were preceded by extreme (-1 st. dev.) outflows in the several months prior - not the case this time. Cumulative $ inflows YTD have also been the most positive in our data history."
Seven of 11 S&P sectors saw inflows, with
Info Tech (
XLK) in the lead. The sector has seen five-straight weeks of inflows. Healthcare (
XLV) and Communication Services (
XLC) also saw healthy inflows.
Energy (XLE) and Financials (XLF) had the biggest outflows.