Plenty, according to Macquarie strategists Matthew Brooks and Sophie Bolton. They have just constructed a new FOMO Meter that seeks to measure whether investor sentiment has become overheated.The verdict? Be wary, brace for below-average returns and get defensive.
Individual investors’ equity exposure has ticked higher, a net 50.2 per cent of stocks on the S&P 500 are above their 200-day average and the VIX volatility index is at 14.3, down from 21.7 a year ago. Since 2016, the FOMO Meter has had a high correlation with returns; when it bottomed in late 2022 at -1.86, the S&P 500 would go on to rise 22 per cent over the next 12 months.
If it is delayed rate cuts that drive sentiment, then Macquarie also suggests the insurers are a sector to own.