If the bullish scenario plays out this week, flows are likely to be tilted more so to North America ...
09/06/2007 12:00 am EST
Still Bullish After All These Years
By Howard R. Gold
September 6, 2007
Washington, DC—Nothing seems to faze users of MoneyShow.com.
Confronted by plummeting stock prices, a credit crunch and a global financial panic, investors who answered our latest MoneyShow.com sentiment survey were just as bullish as those of you who participated in May—about two-thirds of all respondents.
Where have you all been for the last four months? Tahiti? Mars?
Wherever it was, it must have put you in a good mood—or stiffened your backs. Because it takes a strong constitution to go through what we’ve just experienced and remain confident that things will work out in the long run. But they usually do.
Some 49% of MoneyShow.com’s sophisticated, self-directed investors polled between August 29th and September 3rd are “somewhat bullish,” predicting that the Standard & Poor’s 500 index will rise less than 10% by the end of the year. A very bullish 14% think the Dow will advance more than 10%, for a grand total of 63% bulls—exactly one percentage point less than in May.
By contrast, only 17% are bearish (they think the Dow will fall by less than 10%) or very bearish (they expect it to fall more than 10%). Another 20% are neutral: they believe the Dow will remain about the same when 2007 comes to a close.
The most recent poll of members of the American Association of Individual Investors remains slightly tilted to the bears—46% vs. 40% who described themselves as bullish.
Again, the MoneyShow.com audience appears more bullish—or more adventurous—than the broader swath of individual investors, who have been missing in action throughout much of the current bull market, as I discussed here and here.
Perhaps active, self-directed investors smell a buying opportunity amid all the doom and gloom.
But what they buy now may be very different. Back in May, respondents’ favorite asset classes were foreign stocks (39%), large-cap US stocks (25%) and commodities (22%). Now, in what may be a sea change, large US stocks—which underperformed other groups for seven years—have drawn even with foreign stocks, both getting about 30%.
Commodities come in third, while small-cap stocks are just about where they were in May (13% picked them to be the best performers by the end of the year). Some 8% of respondents liked cash, while bonds and real estate hardly registered.
Another big change from May: back then, about two-thirds said the Federal Reserve would hold firm on short-term interest rates for the rest of 2007. The participants were evenly split as to whether gross domestic product growth would increase or decrease and a clear majority—55%— thought inflation would remain constant. Click here for more details on the results.
The MoneyShow.com’s new sentiment indicator was presented here at the Washington, DC Money Show and posted on MoneyShow.com. Some 302 respondents were drawn from MoneyShow.com’s Investors subscriber list, comprising self-directed individual investors. The maximum margin of error is within 5.35 percentage points of the proportion reported using a 95% confidence level.
The bullish percentage reflected here was slightly lower than the 70% shown in a poll of traders we conducted in June.
MoneyShow.com will do other polls of investors, traders, financial advisors, and financial gurus throughout the year.
The pros often use sentiment surveys as contrary indicators, which in this case might mean an even deeper selloff than we’ve seen so far. But the remarkable consistency and steadfast bullishness of the MoneyShow.com investors is striking.
Maybe they know something the rest of the world doesn’t.
Comments? Please email us at TopProsTopPicks@InterShow.com.
Howard R. Gold is editor-in-chief of MoneyShow.com. The opinions expressed in his commentaries are his alone and do not necessarily reflect the views of InterShow.
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