The Fear part is a little more complex, and we'll get to that later. Suffice it to say, when people see they are losing money they often panic and try to "do something" about it - but the only thing they can do is to sell at the bottom of the market, which is not a smart choice.
While the inflows have helped push the market higher, they also can be seen as a contrary indicator when they flash signs of excess. BofAML uses a proprietary "Bull & Bear" indicator that gauges when inflows or outflows point to investors moving too far to either side.
The current reading on the indicator of 7.9 is the most bullish since a reading above 8 in March 2013 — a sell signal. Michael Hartnett, BofAML's chief investment strategist, said the Bull & Bear indicator has shown 11 previous sell signals since 2002 and has been correct each time.
In the near term, around February and March, that suggests a technical pullback for the S&P 500 to 2,686, which would represent a drop of close to 6 percent, Hartnett said.
The list goes on an on - maybe you have some factors as well. And maybe I am wrong about this. But a decade-long bull market has to end sometime, and let's just hope this one ends well - with a gentle, "pffffft!" and not an explosive "Bang!"
- Real Estate is again overpriced in many markets.
- Interest rates are climbing, which will make refinancing debts more costly.
- Corporations are heavily in debt (see #2) which will cut into profits.
- Individuals are heavily into debt, limiting their ability to buy things.
- A tariff war will raise prices domestically and reduce exports
- Farm income is off by half. The tariff war could bankrupt many farmers.
- When bubbles burst, it creates uncertainty in the market. Bitcoin.
- Too many amateurs are getting into investing.
- Amateurs are looking for huge short-term returns.
- World Politics.