Friday, May 9, 2008

What is Investor Sentiment Telling Us?

Somewhat conflicted right now. I'm more bullish than the bears and more bearish than the bulls. We're well aware of all the ways the consumer is being squeezed right now, but there are reasons to be bullish. Wall Street and big companies always find ways seem to navigate situations like this by limiting bad press and keeping investors on board until things improve.

The average investor is so bearish right now, and that makes me bullish. Money market funds continue to climb. One interesting thing I like to keep an eye on as an indicator is the "comment index", or so I call it. On most news sites and blogs, they allow readers to make comments. Every article with a bullish tone just gets leveled by negative comments. I mean, 90% of these comments are bearish.

A lot of pundits and bloggers that are bearish are interesting to watch as well. Those who are expecting a recession seem to try and re-define a recession when they don't get the numbers they want. If any numbers come out bullish, they just say how corrupt the system is and statistics are manipulated. If the numbers come in the way they want, than they are concrete evidence! Again, be careful in believing what these writers are saying. If they truly were good at anticipating markets, they would be traders.

I'm slightly bearish on the market as a whole right now, but there are plenty of names I'm looking to buy.

1 comment:

Bill G. said...

I think you hit the nail on the head, regarding current market conditions. With so many bears around, I tend to be bullish on the market as well. But like you said in your previous post, it's not the market as a whole, but very selective stocks that I'm interested in.