I marvel at the behavior of humans and how group think is often a counter indicator. Isn’t it fucked up? What does it say about our species? Whenever we converge on an idea and elect it, the exact opposite occurs, sort of like what has happened with Obama.
It sure seemed like a good idea then. Now? Not so much.
BofA/Merrill is out with a report that discusses some of their research into sentiment and how an overly hated market like this one has led to gains in every instance on record.
“Historically, when our indicator has been this low or lower, total returns over the subsequent 12 months have been positive 100 percent of the time, with median 12-month returns of [more than] 27 percent,” they wrote. “While sentiment has improved significantly off of the 2012 bottom, today’s sentiment levels are well below last summer’s high of 54.0 and where they were at the market lows of March 2009.”
I’ll call bullshit on those numbers above. Being well versed in statistics, having invented Exodus, I can tell you that in order to get a median return of 27% over 12 months, the data set must be incredibly small, which renders it unreliable. Still, it makes for good cocktail conversation.
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Sounds like they’re trying to unload risk onto their customers before September vamps up.
I can’t help but notice that over the past couple years, many Bulls continue to cite “extreme bearishness in market sentiment” as the lynchpin for their bullish views. Obviously, tops occur in market euphoria, but is it possible that we have reached extereme levels in the observations of market bearishness?
This sounds like gibberish, I know. What I’m trying to say, is maybe this is a reverse of the reverse. The bubble is in Bulls being so complacent, comforted in their often cited “bearish sentiment polls”….yet the ACTUAL data shows makets at extreme highs and at extreme multiples, especially when adjusted for shenanigans.
Or maybe it really is as easy as getting an emotional read on your neighbors portfolio. what do I know.
What extreme multiples? Elevated and extreme are not the same thing.
Absolute trivialities
Indexes being controlled 100% by Ptb. Bullish/bearish meaningless quite some time. The last 40-50 tradingday charts are supremely demonstrative of It, and what I said 3+ years ago Programmed Indexes
Kind of makes sense, since sentiment and drive supply/demand for equities. When everyone is bullish they are probably all-in so there is no one left to buy.
correction – sentiment “can” drive
Imagine if your hands were your feet and your feet were your hands and your hands smelled.
AAII bullish sentiment survey hit a 11 year low in late May.
Neutral vote hit a 16 year high last month.
Absolute trivialities
Indexes being controlled 100% by Ptb. Bullish/bearish meaningless quite some time. The last 40-50 tradingday charts are supremely demonstrative of It, and what I said 3+ years ago Programmed Indexes
So, those that voted bullish were most likely the programmers I assume?
What did you vote?
Sentiment & other traditional factors are beyond irrelevant.
Why it still astounds me how nondiscriminating everyone is to direct, monitored, active programming right in your face. The similarities every single trading day, 1 or 2 levels even more-pronounced than pre brexit.
If someone is discussing merits of sentiment, extreme obliviousness on the irrelevancy of their discussion.
Odd they haven’t become more bullish then, knowing what we all know.