Financial Post | Business

The Financial Post takes a weekly look at tools and strategies that will help make your investment decisions. This week: Contrarian indicators.

If you’re listening to what the big institutional investors are doing, then buying equities is in and holding bonds is out.

The Fund Manager Survey, released by the Bank of America Merrill Lynch this week, found that managers are currently long on cyclical stocks, the U.S. housing market and banks. Equity exposure increased to 60% in September, the highest level since February 2011 and up from 56% in August. Meanwhile, the exposure to bonds is at the lowest level since April 2006.

Those numbers might tempt investors to swap their bonds for stocks — but not so fast. Sometimes it pays off to look at data from a contrarian point of view. In that case, too many managers favouring one asset indicates that asset is ripe for a…

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