Bulls Run Wild at MoneyShow.com

05/14/2007 12:00 am EST


Howard Gold

Founder & President, GoldenEgg Investing

By Howard R. Gold

Las Vegas, May 14, 2007

There's good news and bad news in the brand-new MoneyShow.com investors' sentiment indicator, to be unveiled today.

The good news: individual investors are overwhelmingly bullish.

The bad news: individual investors are overwhelmingly bullish.

How can bullishness be bad? Well, some analysts use sentiment indicators as contrary indicators, on the theory that when the crowd goes one way, it's time for smart investors to go in the other direction.

We'll see. But right now, a sample of MoneyShow.com's sophisticated, self-directed investors is running with the bulls.

Half of the investors polled between May 1 and May 9 are somewhat bullish, predicting that the Dow Jones Industrial Average will rise less than 10% by the end of the year. Another 14% think the Dow will advance more than 10%, making them very bullish, for a grand total of 64% bulls.

By contrast, only 18% are bearish (they think the Dow will fall less than 10%) or very bearish (it will fall more than 10%), while another 18% are neutral: They believe the Dow will remain about the same when 2007 comes to a close.

The results couldn't be more different from those of the widely followed weekly sentiment indicator published by the American Association of Individual Investors.

In the week ending May 3, less than 29% of AAII members polled on the organization's website were bullish about stocks, while a huge 54% described themselves as bearish and 17% said they were neutral. That was way below historic averages of bullishness and way above historic measures of bearishness.

Does anyone at AAII want to make a wager? Just kidding.

The favorite asset classes of individual investors polled by MoneyShow.com are foreign stocks (39%), large-cap US stocks (25%) and commodities (22%). Small-cap stocks appear to be out of favor (10% picked them to be the best performers by the end of the year), while cash (2%), bonds (1%) and real estate (1%) brought up the rear.

52% of respondents expect inflation to increase, while another 44% think it will remain constant this year. Another solid majority (58%) believe US gross domestic product (GDP) growth will increase-37% say it would slip. And just about two-thirds say the Federal Reserve will hold firm on interest rates for the rest of 2007 (20% expected the central bank to cut rates, while 14% believe rates will rise.)

Click here for more details on the results.

MoneyShow.com's new sentiment indicator, to be unveiled Monday May 14 at the 19th Annual Money Show Las Vegas at Mandalay Bay Resort and Casino, was conducted by MarketSmart Services in St. Petersburg, Florida.

450 respondents were drawn from MoneyShow.com's Investors subscriber list, comprising self-directed individual investors. The maximum margin of error is within 4.32 percentage points of the proportion reported using a 95% confidence level.

MoneyShow.com will conduct other polls of investors, traders, financial advisors, and financial gurus throughout the year.



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