From the desk of Willie Delwiche.
Key Takeaway: Year-end strength in stocks alleviated some of the concern that had crept into investors’ collective psyche. Short-term sentiment swings aside, investors remained positioned aggressively long stocks at a time when strategic risks remain high. December set a monthly record for equity ETF inflows and that price chasing pushed equity valuations to some of their highest levels on record. The optimism in positioning is not reflected in the sentiment surveys. But if the unwinding in the speculative bubble that peaked early last year gains steam, look for a lack of optimism to be replaced with outright pessimism, followed by a re-positioning of assets.
Sentiment Report Chart of the Week: Commodities soar but struggle for attention![](https://media-allstarcharts.s3.amazonaws.com/wp-content/uploads/2022/01/willie01052022.png)
After a relative lull around mid-year, equity ETF inflows intensified as 2021 came to a close. A record $90 billion flowed into equity ETFs in December and pushed the total for the year above $650 billion. Commodities continue to struggle to attract attention, despite a better performance in 2021 than US stocks. Commodity ETF flows are dominated by gold-related issues. But this too says something about the utter absence of deep-seated optimism around commodities.