Investor Consensus (Positive Consensus/Bear Market Indicator): Exuberance For Stocks Continues
In the words of Joshua Brown of Reformed Broker fame, “Everything Is Awesome!”. Pick up any investment sentiment survey/indicator and it points to a complete, uber exuberance for stocks. Here are some of the biggies:
The American Association of Individual Investors weekly investor survey shows that almost 39.5 percent of investors surveyed are bullish on stocks. This is up 3 percent from the previous week and is now at its above its long-term average level of 39 percent. Bearish investors make up 22.2 perecent which is down 1 percent and well below it’s long-term average of 30.5 percent.
The latest Investor Intelligence survey which tracks sentiment of investment newsletters revealed that almost 60% of investor newsletter advisers are expecting higher stock prices in the future. The last times the survey crossed the 60 percent level was in August 2007 (you what happened after that) and October 2013 when rumblings about curtailing the Quantitative Easing money printing by the Federal Reserve
Finally, one of our go to sentiment indicators, the CNN Fear and Greed Index needle is now firmly pointing to the Extreme Greed side of investor sentiment.
It’s the feel good story of the year. Stocks of all stripes are working well and investors can’t get enough of them. Retail investors, Smart Money People, newsletter publishers, financial media (well they’re always bullish). All ends of the spectrum are in a happy place when it comes to stocks. Company lost money? Psshah right. Whatever, buy some more. GDP slow to flat? Double down on Facebook. It seems we are in a Teflon market. Nothing can take it down so you can let your guard down and devour Apple’s and Chipotle’s and Tesla’s to your hearts content….OR…you can look at these indicators and review past history to see that when exuberance gets irrational, bad things can happen. The higher the high’s can lead to much lower and more violent lows. It can go both ways you know.