It doesn’t make sense!
The chart below is from the “Investors Intelligence Sentiment Survey” as of 1/3/2023. The blue data flow is noisy, so focus on the red line. It is the 52-week moving average and tends to reduce the noise.
What this data flow represents is how positive (bullish) the investment outlook is versus negative (bearish). Notice the green horizontal arrow and specifically that only two times since 1988 has the red line been below where it is now.
In English this says investment advisors are petrified, i.e., so afraid of what’s next they are not buying at these reduced valuations. Hmmm! What happened on these two prior occasions when the red line was below the green arrows?
Post 1995: Five straight years of +20% rates of return
Post 2009: The market went up approximately 450% into the 2020 pandemic.
Like The Weekly Update for 12/30/2022 (Read it Here) and 1/6/2023 (Read it Here), this chart is super important. These charts individually and combined, strongly suggest we are clunking along the bottom of valuations. The nutty unknown wild cards that played out in 2022 are becoming more known.
I understand, it does not make sense, so just look back over the last several decades and make a “note to self”, it has never made sense to invest when values are down, but that is where the “Five Year Money” (Read it Here) returns are stated.
I’m interested in your thoughts, comments, and observations. Feel welcome to call, email or stop by the office and say Hi.
James O. Lunney, CFP®
CERTIFIED FINANCIAL PLANNER™ Professional
Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.