Reversion to the Mean?

Do you believe in it? I got this in an investment newsletter: "As weâ??ve suspected since this rally began, theyâ??ve been doing exactly what they are being induced to do, whether itâ??s good for them or not over the long run.

It found investors have been riding the stock wave. Stock and stock funds now make up 62.4% of investors portfolios. This is the largest allocation to stock and stock funds in 11 months and is slightly above the 23-year average allocation of 60%.

The survey found they continue to love bonds. The average allocation for bonds and bond funds totaled 21.8%. Thatâ??s significantly higher than 23-year average allocation of 15%.

With both of the primary asset classes most investors focus on taking up disproportionately large portions of their portfolios, there canâ??t be much cash left on the sidelines. The survey found individual investors have allocated a mere 15.9% of their portfolios to cash. Thatâ??s well below the 23-year average allocation of 25%."

Is this spelling extreme optimism? Time to bail on stocks? (And Zeb, if you want to argue, do so with those numbers, not me.)