Market sentiment: extreme bullishness in emerging countries, money pouring into stocks at the fastest pace since 2007, biggest rally in 16 years

At the risk of repeating myself, December 2010 seems to be month when all the stars align, and bullishness is reaching historical extremes. This is the fourth market sentiment post this week and here's what we now have:

1. No New Normal Next Year Seen by Strategists Predicting 11% Gain in S&P 500
2. Hedge Funds Raise Commodity Gain Bets to 4-Year High
3. Put Call Ratio: Everyone’s Betting On The Bull
4. Volatility is back to April 2010 levels
5. Rydex Nasdaq 100 Bull/Bear Ratio At Highest Since Dot Com Collapse
6. US CEOs Most Optimistic since 2006
7. Extreme bullishness in emerging countries, money pouring into stocks at the fastest pace since 2007, biggest rally in 16 years

Dec. 16 (Bloomberg) -- Individual investors are pouring money into emerging-market stocks at the fastest pace since 2007 as the biggest rally in 16 years spurs three of the world’s largest banks to predict shares will hit record highs next year.

The last time investors were this bullish, the MSCI Emerging Markets Index sank 11 percent in three months, data compiled by EPFR Global and Bloomberg show. The gauge trades for 2 times net assets, within 4 percent of the most expensive level on record versus the MSCI World Index of developed-nation shares, according to MSCI Inc.

“After all this money has flooded in, with everyone in love with them and all the euphoria surrounding them, it’s hard to find fundamental value,” said Harris Associates LP’s David Herro, who was named international stock fund manager of the decade this year by Morningstar Inc. “Growth in emerging markets is greatly helping the world, but you can overpay for it and that’s what’s happening.”
[...]
“There’s a growing realization that in some ways emerging markets are a safe place to be,” said Mark Mobius, who oversees about $34 billion as executive chairman of Templeton Emerging Markets Group. “I’m quite optimistic.”

The MSCI emerging-market index has surged 136 percent from its March 2009 low [...]

Emerging-market equity mutual funds are attracting money at an accelerating pace even after gains in the MSCI emerging- markets index slowed to 13 percent this year from 75 percent in 2009. Inflows from individuals into funds during the past three months topped $12 billion, the highest level since the three- month period ended December 2007, according to data compiled by Cambridge, Massachusetts-based research firm EPFR.[...]