BAML SURVEY: Stocks haven't been this overvalued since right before the tech bubble burst

Investors who think stocks and bonds are overvalued are in a record majority compared to those who think they're not, according to Bank of America Merrill Lynch.

On Tuesday, the bank published results of its Global Fund Manager Survey which found that on net, 54% of respondents say the combined valuation of both asset classes is close to all-time highs.

The overvaluation of stocks is the highest since May 2000, the survey found. The tech-heavy Nasdaq lost nearly 78% of its value between March 2000 and October 2002 as the tech bubble burst.

"Investors see an unambiguous vulnerability to 'bond shock' among risk assets, with the most crowded negative interest trades and EM equities susceptible should the Fed and especially the BoJ fail to reduce bond volatility in September," said Michael Hartnett, BAML's chief investment strategist.

Several people, from Federal Reserve Chair Janet Yellen to Goldman Sachs' chief US equity strategist David Kostin, have warned about stock valuations as the market continued to rise to all-time highs amid lukewarm earnings growth. In a client note on Sunday, Kostin said the S&P 500 trades at the 84th percentile of historical valuation, while the median stock is at the 98th percentile.

And, investors drove up the value of US bonds as they were faced with fewer alternatives that would offer a steady, positive return in a period of economic uncertainty.

In BAML's survey, 83% of respondents said the Bank of Japan and European Central Bank will maintain negative interest rates for the next 12 months, and 82% thought bond prices in developed markets are frothy. Also, the majority of people thought that Treasurys would be the biggest driver of stock prices over the next six months.