A number of my recent posts have focused on the high level of risk taking in the capital markets. To name a few, I cited narrow high yield bond spreads, flows into crypto, trading of zero-day options, flows into leveraged ETFs, and so on. Well, here are two other indicators. 
The first depicts the average equity weighting of individual investors. Note that it is just below an all-time high and significantly exceeds the level that prevailed prior to the 1974, 2000, and 2008 bear markets. This indicator does not necessarily provide useful information on the short-term outlook for equities, but peaks have accurately predicted seven-to-ten-year periods of modest returns. The next chart provides the same information for institutional investors. Once again, it has not been at this level since the eve of the Great Financial Crisis.
This data leads me to two possible conclusions. First, investors of all types have historically been underweighted in equities and have finally reached a more sensible allocation that reflects the actual risk and reward inherent in stocks. Alternatively, all investors are suffering from Fear of Missing Out (FOMO) and extreme optimism that will eventually lead to an unpleasant outcome. I may be the world’s worst stock market forecaster, so I will refrain from making a prediction. However, I do believe it is important for each of us to stick to our long-range investment program and avoid getting carried away by the prevailing euphoria.