Global investors are taking on more risk, but a recent survey from Bank of America reveals a potential 'sell signal' as cash holdings drop to 3.7%. This could indicate that bullish positioning may hinder risk assets, especially with the absence of a Federal Reserve rate cut in December. The survey highlights concerns about market bubbles, with 45% of respondents citing an AI bubble as the biggest tail risk. Additionally, a record number of investors believe companies are overinvesting, suggesting a need for spending restraint among hyperscalers. The technology sector remains crowded, with 54% of investors holding a 'long Magnificent 7' position. Despite improved macro sentiment, including positive global growth expectations and a 53% forecast for a soft landing, a significant 63% of investors believe equity markets are overvalued. Private equity and private credit are seen as the most likely sources of a systemic credit event, according to 59% of respondents. This survey, conducted between November 7 and 13, involved 172 fund managers overseeing $475 billion in assets.
