(Bloomberg) — Ahead of this week’s Federal Reserve meeting — and in a year when many didn’t make the right calls — professional investors and do-it-yourselfers are sharply divided over the best way to position ahead of the central bank’s rate decision on Dec. 14.
Most Read from Bloomberg
The top responses in the latest MLIV Pulse survey found that 37% of retail investors believed owning US stocks is the best trade ahead of the rate decision, while 40% of professional investors said it’s better to short them.
“There’s been a split between retail and institutional or professional investors for most of the year, and positioning by professionals has been much more bearish,” Art Hogan, chief market strategist at B. Riley Wealth, said by phone. “Institutional investors are likely talking their book more than they’re talking their intellectual honesty. If you look at net positioning, there’s a lot of professionals that are still offsides.”
Alec Young, chief investment strategist at MAPsignals, said that while “retail might have it right,” the professionals’ caution is warranted because consumer price index data will be released Tuesday, a day before the Federal Open Market Committee rate decision and both have driven big market moves.
“There’s a lot of concern — that’s what happens at the end of a bear market,” Young added. “People are too cautious. But generally speaking, the market does very well in the 12 months after inflation peaks.”
As part of its efforts to tamp down relentless inflation, the Fed is projected to raise rates by 50 basis points on Dec. 14 to a band of 4.25% to 4.5%. In that aftermath, 31% of 515 respondents agreed that stocks will be the biggest beneficiaries.
Story continues
“If the Fed’s stance is slower, maybe longer but slower, I think people can live with that and that’s why stocks would go up,” Kim Forrest, founder and chief investment officer at Bokeh Capital Partners, said in an interview. “Retail investors are just looking at a phenomenon called the Santa Claus rally, and the…
..
