Comments on: How Bullish is the Investing Public?

By: D.Wallener

D.Wallener — Wed, 04 Jan 2006 03:01:08 +0000

On what possible basis can this be interpreted as being “very bullish”? Two thirds of the respondents are expecting a tightly range-bound market, that is a definition of “very bullish” with which I am unfamiliar.

By: LDB

LDB — Tue, 03 Jan 2006 23:48:32 +0000

Thanks for taking the time to post. I appreciate opinions.

Here’s my take: The insiders are building up anxiety regarding the 11,000 mark. It’s 150 points away, it’s 300 points away. It’s 50 points away, it’s 200 points away. . . etc. It will seem as if 11,000 is a huge step, and celebrations will occur as soon as it is reached. (But, really, who cares?) People are deemed to be extravagant for suggesting that the Dow will go up 150 points! I see this as a pessimistic sentiment. (No one is saying that the Dow will be 20,000, etc.) In effect the average opinion seems to be that the market will be range-bound, and mostly flat, and as the intelligent investor knows: a flat market is a bear market. So my summary is that with flat predictions, most people are bearish.

Then, when the Dow makes it to 11,000, your average investor is supposed to breathe a sigh of relief, and sell with his meager profit, expecting a correction, or staying flat, at best. . . Then the market continues to advance. . . and the average investor becomes more bearish and pessimistic (as the biggest bear is a sold-out bull). My contrary opinion: a greater advance than is expected.

By: Lord

Lord — Mon, 02 Jan 2006 23:31:18 +0000

The difficulty with this question is it asks for a prediction on a specific date, testable, yes, reliable, no. One can expect sizable declines or advances and still expect a return to current levels. Since Dec tends toward optimism, I would tend to say these are rather pessimistic results.

By: John East

John East — Mon, 02 Jan 2006 22:15:41 +0000

I just love the optimism of some of you guys. If I read you correctly, because there is bullish sentiment out there, the contrarian position is that January will be twice as bullish as the bulls expect. Hilarious. Truly hilarious.

By: stockman

stockman — Mon, 02 Jan 2006 22:12:30 +0000

How is a call for a 3.8% GAIN a negative outlook? I believe that would be higher than the 5 year average gain of the S&P500, no? The fact that the average expectation is +3.8% and the SP500 just had a what return??? 3% or total return of 4.33%. The average person appears to be extrapolating last year’s results, not unusual.

I would give that either extreme- DOWN 12% or greater / UP 12% or greater… is more likely than the majority view of up 2-11%. I ‘ll take the under given sentiment as represented by COT data of specs vs. commercials; cash levels as represented at Rydex funds; complacency as presented in the VIX combined with prices being at the high end of the range.

It is not what people say in a survey that matters. It is how they are postioned in their portfolio. It would appear that they are postioned to MAKE money in a rising market though their expectations are to realize a return slightly higher than cash. Their is little fear of a substantial decline so they are FULLY INVESTED.

By: opportunity cost

opportunity cost — Mon, 02 Jan 2006 21:23:55 +0000

could this be counterintuitive, where bullish market sentiment is a predictor of a bear?

By: opportunity cost

opportunity cost — Mon, 02 Jan 2006 21:21:19 +0000

this may be a lot of focus on the DJIA and not enough on broader or other indexes & averages.

By: Jack K. Miller

Jack K. Miller — Mon, 02 Jan 2006 20:31:11 +0000

The weighted average of the survey is about 11,126 or up 3.8%. Hardly what I would call a bullish call. The survey suggest the readers of the WSJ are bearish, calling for below average performance.

BR: How do you get a weighted average from one man, one vote?

By: Jack K. Miller

Jack K. Miller — Mon, 02 Jan 2006 20:20:44 +0000

I’m pretty much in Steve’s camp on this one; the idea that because many people answered in the up 2 to 11% is nothing to get excited about. The AAII Bears to Bulls 3 week moving average ratio is currently around 50%; no big deal here either.

Steve is right; the contrarian pick according to this poll is to go high. I’ll take the bet. The build out of the internet, “mobile TV”, and energy projects is going to make for explosive growth.

By: G Eddy

G Eddy — Mon, 02 Jan 2006 15:58:13 +0000

I suspect that the lopsided bull/bear senitment of the typical reader of the WSJ has more to do with blind hope support for the Republican economic policies (trickle down, borrow and spend) versus that of the Democrat’s (bubble up, tax and spend) than with rationally derived judgments.