Stock Market Flashes ‘Sell‘ signal as Investor Cash Levels Plummet, BofA Survey Reveals
NEW YORK – November 18, 2025 – A Bank of America (BofA) monthly survey is signaling a potential downturn in the stock market as investor cash holdings have fallen to .7%, a level not seen since 2002. The decline is triggering a ”sell” signal amid growing concerns about inflated valuations, particularly within the technology sector.
Historically, the market has reacted negatively following similar drops in cash levels. Strategist Michael Hartnett noted in a research report that stocks declined and Treasury yields rose in the one to three months following the previous 20 instances this cash level was reached.
The MSCI All-Country World Index has climbed 17% this year, but anxieties are mounting over a potential bubble in artificial intelligence (AI) stocks. The S&P 500 has already retreated approximately 3% from its October peak, and market expectations for a Federal Reserve interest rate cut in December are diminishing, as reflected in swap market activity.
Investor stock ownership is currently at its highest point as February, according to the BofA survey.”Barring a rate cut in December, there will be another market correction.The current position is more of a headwind than a tailwind for risk assets,” Hartnett stated.
The pressure is compounded by continued heavy investment in AI by tech giants, prompting a reassessment of economic growth prospects. JPMorgan Chase Vice Chairman Daniel Pinto recently warned that a reevaluation of AI-related stock valuations is overdue, anticipating potential ripple effects throughout the market.
BofA research identifies a potential AI bubble as the most significant tail risk. For the first time in two decades, survey respondents also expressed concerns about companies “overinvesting.” Looking ahead, 42% of investors predict international equities will outperform, compared to 22% favoring U.S. equities.
The survey, conducted July 7-13, included 172 market participants managing a collective $475 billion in assets.
