The Weekly Update 5/13/2022
In prior updates I have noted a few data points we tend to look at to determine how much fear is driving the market valuations of Corporate America. A quick review is in order.
The “Fear vs. Greed” Index just hit 21 out of 100, where 1 is the lowest in the “Extreme Fear” category of 1-25 and 100 is the “Extreme Greed” category of 75-100.
Thus, “Extreme Fear”!
The American Association of Individual Investors (AAII), Bullish (positive on the investment outlook for the next six months) versus Bearish (negative outlook) just hit 16% out of 100% Bullish (positive). Thus, 84% of investors are not positive!
Then there is the good old CNBC report that is only pulled off the shelf to scare the crap out of anyone watching, “Markets in Turmoil”! To be honest, I don’t watch CNBC, but a few times over the years I have seen the “Markets in Turmoil” segment.
Now, here is the interesting part. The table below is from Charlie Bilello, who I don’t know, but he went back and tracked what the valuations of Corporate America, as measured by the S&P 500, after each CNBC segment of “Markets in Turmoil” hit the airwaves.
Check it out below:
Make special note of the date the program aired and the S&P 500 return one year later!
Per this data, 100% of the time the valuations were higher one year later.
Of course, this could be the first time since May 6, 2010, that valuations are not higher. However, it is interesting to think that with investors scared to death, those who want out are out, or close to being out. Once they have finally sold their bigger financial future, history suggests valuations will once again continue to trek higher.
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
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Investing involves risk including loss of principal. No strategy assures success or protects against loss.
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