Bank of America's alarm bells are blaring to sell off AI stocks, but investors are leaning in instead — how vulnerable is your portfolio?

Though it may not seem crucial to those outside the banking business, one of the key metrics measured through the poll is the proportion of cash that these strategists maintain within the billions of dollars in mutual, pension and other funds they oversee — and which countless everyday people have a stake in.

And lately, that number has fallen threateningly low, which, alongside other compounding patterns, have created a recipe for disaster.

Past the point of multiple ‘sell’ signals

When the stock market becomes particularly overzealous — as it almost undeniably has amid the AI mania — there are a number of benchmarks and trends that experts consider strong signals to sell or otherwise rebalance, as a major correction could be on the way.

These include measures such as the CBOE Volatility Index, also known as the general “fear gauge” of Wall Street, and CNN’s Fear & Greed Index, which take into account stock price swings compared to historical averages, level of market bifurcation, put/call ratios (which reflect expectations that a stock will summit versus expectations it will plunge), and more.

Beyond indices that quantify market sentiment and direction, there are also direct samplings of financiers through polls like Bank of America’s, which also looks at how much stocks (versus, say, bonds or cash) are dominating funds.

And, as of August, more is being allocated to equities than any other time in the last five years (56% overweight), while fund cash has depleted to make up just 3.5% of total fund value. This is one of the lowest levels in 30 years of records — and far under the 4% that the bank’s authorities regard as a contrarian indicator to sell.

Meanwhile, the BofA’s Bull and Bear Indicator has also been flashing red for about three months, presently sitting at 9.3 when anything above 8.0 is considered an “extreme bull” market and thus also a trigger to sell.

Experts worry about such high optimism

Under these circumstances, the guidance from Michael Hartnett, Bank of America’s chief investment strategist, who produces the Global Fund Manager Survey, is to “retreat/rotate, not reload,” meaning “retreat from risk assets and/or rotate into some defensives, duration, and the U.S. dollar.” These defensives include bonds, stocks in categories like essential goods, and overseas markets.

Analyzing your own portfolio, speaking with your financial advisor about rebalancing and looking at alternative investments is prudent if you’re at all concerned about being too all-in on the equities driving the AI bubble. And all-in is exactly where major fund managers are right now, with a record high 56% of them, per the poll, expecting a “no landing” scenario, meaning they believe the bull run will continue with more double-digit gains — optimism that often comes before a downturn.

Pundits also note worrying overcrowding in the same areas of the market: tech, of course, which, strangely enough, the same investors also say is the largest risk at the moment.