An MFS Investment Manager Is Fighting Fear Of Missing Out and Dumping Stocks

Wall Street is counting on FOMO, or fear of missing out, to power the next leg of this fierce stock rally. But some, like Rob Almeida, refuse to be drawn in.

The veteran strategist and portfolio manager at MFS Investment Management, a nearly century-old firm overseeing about $500 billion, is digging in his heels. With stocks volatile in the wake of their epic run, Almeida argues stretched corporate balance sheets and overly rosy economic projections make it too early to dive back in.

“The conditions going into this recession and this type of recession that we’re in are worse,” Almeida said in an interview. “I would expect the earnings degradation to be something worse than average, but the market has it something materially better.”

Almeida has slashed net equity exposure in the long-short fund he manages to 10%, its lowest ever. The market-neutral strategy has beaten 90% of its peers this year. In his income fund, he’s cutting stocks in favor of bonds. Elsewhere at MFS, his colleagues are selling cyclical equities, a sign of pessimism in the economic recovery.

Many of his peers are watching the market recovery “with an incredulous and frustrated look on their faces,” said the strategist.

Almeida’s skepticism lies at the heart of the debate on what it will take for institutional investors to unleash their trillions to buttress the rally anew.