Investors advised to tread carefully

Investors have been warned to taper their high bullish sentiment levels towards Australian equities by the president of theAustralian Investors’ Association(AIA), Bob Andrews, following a joint survey into investor and adviser market outlook.

“The jury is still out on whether it is a bear market recovery or a genuine recovery. In those circumstances I think there is a need for caution with respect to committing too heavily into equities,” Andrews says.

The comments follows a joint AIA and Adviser Ratings survey, which found investor and adviser “bullishness” towards equities peaked again in October - surpassing the previous record level posted in August.

“The biggest movement is in the level of bullish sentiment for individual investors reaching a new peak of 61.3 per cent, up from a 54.4 per cent in August,” the survey says.

“The traditional gap in bullish sentiment between investors and advisers continues to narrow and is at its smallest since we started the investment sentiment survey in July 2002,” the survey commentary says.

It says adviser sentiment has shown a small increase to reach a new high of 72.8 per cent, up from 72.4 per cent in August.

However Andrews warns investors and advisers that the survey needs to be treated with an element of caution in circumstances where it is still unclear whether the move from property into equities reflects genuine recovery or just the recovery from a bear market.