The NAAIM exposure index, which tracks how much active money managers are invested in the US stock market, recently reached a striking 99%—a level that often signals market peaks. While the speaker remains optimistic about the long-term prospects for the S&P 500, thanks to stabilizing interest rates, they are taking a more cautious approach. This includes trimming back on riskier long positions and diversifying by adding investments like natural gas while shorting a healthcare stock. This strategic shift anticipates that the high exposure among other managers will trigger quick portfolio adjustments and increased market volatility, much like a game of musical chairs.
