Market Sentiment is Still Bullish
by Cullin Roche
Bullish sentiment remains high according to the AAII and Investors Intelligence surveys. The AAII reading of bullish investors fell 2.4% to 42.5% on the week. This is the fourth week of declines in the AAII survey, however, it remains at a relatively high historical level. Charles Rotblut at AAII describes this as a “cautious optimism”:
Though there has been an above average level of bullish sentiment for four consecutive weeks, it remains a cautious optimism. As is evidenced by the recent rebound in bearish
sentiment, many individual investors continue to worry about the pace of the economic recovery and the uncertainty coming out of Washington. Yields are also an issue, and I continue to receive frequent calls about how to find dividend-yielding stocks.
The Investor’s Intelligence survey saw a continued climb in bullish sentiment to 43.3% though not quite at the extremely bullish levels seen in the AAII survey:
Good by September Curse!
that stocks rarely do what everyone expects them to do. For example, on
average, stocks have done worse in September than in any other month.
Many investors were betting the same would be true this year.
It
wasn't to be. The S&P 500 surged 8.76% this September, which was
more than enough to push the index into positive territory for the
year. In fact, during the past 20 years (i.e. 240 months), the S&P
500 has done better than that on only three occasions. It gained 11.16%
in December 1991, 9.67% in March 2000, and 9.39% in April 2009.
Our Forbes Special Situation Survey portfolio went along for the ride and then some. It gained 10.88%. Terex Corp. (TEX) did the best, surging 22.31%.
I
continue to hold a bearish view on the economy. Housing and employment
are what I worry about the most. Nonetheless, I am still avoiding
bonds. Because interest rates are so low, bonds are too risky
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