Despite massive dips in many portfolios, investors
largely remain bullish, market experts say.
So what's wrong with that?
If investors are extremely upbeat about the market,
a _downturn_ is likely coming. When they're
extremely negative, an _upturn_ is imminent.
In the 'Investors Intelligence' weekly survey we read
that 57.4 percent are bulls, 30.9 percent are bears and
11.7 percent are short-term bears and long-term bulls.
The normal range for a bull market is 45 percent bulls,
35 percent bears and 20 percent for the rest, said M. Burke,
its editor. That means today's investor is far more positive
than normal. A bad sign for the market.
The readings are still near the bullish levels
seen in January 1987: nine months before the October
crash. At that time, 61.8 percent of advisers were
bulls and 14 percent were bears.
A bear market is said to end when at least 55 percent
of investors are glum about the outlook.
For example, in late 1994 when the Dow Jones I.A.
was at 3,700, the 59 percent of adviser were bears
for two weeks in a row, the highest percentage in
12 years, M. Burke said. But it marked a market bottom
and set the stage for the long robust rally.
Right now, investors whose portfolios have been hit
figure it's too late to sell. So they're holding on
and not panicking. If the market drops more this year
that's when real pessimism sets in.
The 'Investors Intelligence' began its survey in 1965.
Its premise was that the majority ruled: if more people
were bullish, that's how the market would go. It turned
out that advisors tended to be wrong. Hence, the survey
became a contrary indicator.
Useless hypotheses: consciousness, phlogiston, philosophy,
vitalism, mind, free will
and what about investors intelligence?
This archive was generated by hypermail 2b30 : Mon May 28 2001 - 09:59:39 MDT