Recommended Stock Allocation Continues To Tick Lower

Below we highlight the consensus recommendation for portfolio stock allocation from Wall Street analysts (from Bloomberg) going back to 1997.  Since peaking at 72% back in September 2001, recommended stock allocation has trickled lower and now rests at 58%.  As the chart shows, during the bear market of 2000 to 2002, analysts actually increased their recommended stock allocation initially as the market fell.  Only after the bottom really fell out did analysts begin to drop stock allocation.  This bear market has been different, however, as analysts have continued to lower their recommended stock allocation in the face of declining markets.  As noted, the last time the market was at current levels back in 2003, stock allocation was at 68% vs. 58% now.  This is definitely a chart that contrarians like to see.

 

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