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Sentiment? Depends on who you ask

Posted By Barry Ritholtz On December 20, 2006 @ 11:35 am In Investing,Markets,Psychology,Technical Analysis | Comments Disabled

Our last discussion of sentiment (see Signs of a Market Bottom? [1]) generated a heated debate about whether everyone was too bullish or too bearish.

The short answer is: It depends upon who you ask.

For example, the WSJ’s Marketbeat [2] just reported:

"Optimism abounds among portfolio managers heading into 2007,
according to Merrill Lynch’s most recent survey of global fund managers.

While they believe global growth and corporate profits will weaken in
2007, the nightmare scenarios are being discounted, and investors see
the so-called Goldilocks scenario coming to fruition as the pace of
economic growth declines without a recession. “Compared to three months
ago, 8% of our panel no longer think we are in a late-cycle
environment, but are instead still in the mid-cycle phase,” they write.

Overall, fund managers see global growth receding in 2007,
and for earnings to decline. But they believe corporate balance sheets
are in good shape, with a net 55% saying balance sheets are
under-leveraged. Oddly, while managers believe, on average, that stocks
will be higher 12 months from now and believe equities are undervalued,
most investors are taking slightly lower-than-average risks in their
portfolio, suggesting a somewhat defensive stance — and their sector
allocation proves it. Investors are overweight in banks,
pharmaceuticals, energy and insurance. They’re underweight in consumer
discretionary stocks and industrials."

Compare that cohort (albeit a professional and important one) with this subgroup: Bloggers: Ticker Sense’s
2007 Financial Blogger Outlook shows a very modest forecast:  Financial Bloggers Expect the S&P 500 to Rise 2.39% in 2007 [3].

Outlookequity_1_2 [4]


Tocker_sense_piecharts_1_2 [5]


When asking (or answering) the question "What is market sentiment like" remember that your answer depends upon who it is you are surveying . . .

Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2006/12/sentiment-depends-on-who-you-ask/

URLs in this post:

[1] Signs of a Market Bottom?: http://bigpicture.typepad.com/comments/2006/12/signs_of_a_mark.html

[2] WSJ’s Marketbeat: http://blogs.wsj.com/marketbeat/2006/12/20/spanning-the-globe-optimistically/

[3] Financial Bloggers Expect the S&P 500 to Rise 2.39% in 2007: http://tickersense.typepad.com/ticker_sense/2006/12/financial_blogg.html

[4] Image: http://bigpicture.typepad.com/.shared/image.html?/photos/uncategorized/outlookequity_1_2.jpg

[5] Image: http://bigpicture.typepad.com/.shared/image.html?/photos/uncategorized/tocker_sense_piecharts_1_2.jpg

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