Thirty-two percent of investors described themselves as “bearish” or “extremely bearish” about equity markets in 2016—an increase of nearly 70% from 2015 and the highest percentage since 2009, during the financial crisis. The respondents’ bearish sentiment is reflected in their estimate for TSR: 5.5% annually over the next three years, the lowest estimate since we began conducting the survey and considerably below the S&P 500 90-year average of 10.1%. At a time when share buybacks are near record heights, respondents believe that most of the TSR in the next three years—4.4%—will come from cash payouts (dividends and buybacks). But they don’t believe that payouts alone will deliver superior performance. They put a higher priority on other uses of excess cash, especially growth-oriented investments. In an environment of modest GDP growth, near-record levels of profitability and free cash flow, and high valuation multiples, investors appear to be seeking companies with credible strategies for value-creating growth. They are increasingly interested in companies that are using cash for strategic M&A and that have experienced management teams and compelling equity stories based on strong fundamentals and intelligent capital allocation.