The Weekly Update 5/27/2022
In The Weekly Update for 5/13/2022 (Read it here), I presented a chart from Charlie Bilello, who I don’t know, where Charlie posted market performance after CNBC ran the segment, “Markets in Turmoil”. The market performance went back to 5/6/2010 when the “Markets in Turmoil” first started.
Per Charlie’s research, not one market in turmoil segment presented a lower valuation in Corporate America, as measured by the S&P 500, just one year later. NOT ONE! Of course, it could be different this time. They started rerunning the current segment on 5/5/2022. So, they are adding fuel to the “scare the crap out of everyone watching” group.
Since I wrote the 5/13/2022 piece, the crowd has fallen to a fear level seen only a few times in history. Check it out below:
The Fear & Greed Index hit the lowest in history and the only time EVER the day our entire country shut down due to Covid. It was at “1”.
Does anyone really think we are almost as bad off now? Not likely! But there you have it, we were at 8 on 5/20/2022 and yesterday on 5/24/2022 (I am writing this on 5/25/20220) it hit 4 during the day.
This is clearly a “Contrarian Indicator”, suggesting you should buy when most are selling and sell when they are buying, i.e., Fear & Greed above 75.
In the WSG monthly update, The Seven Signs of a Changing Economy™, I often refer to Yardini Research in Sign #6, Corporate Earnings, as I pull and use Dr. Ed’s estimates for our Fair Market Value (FMV) calculation.
Dr. Ed is also famous for his “magazine” cover indicator. Much like the CNBC “Markets in Turmoil” segment, it is also a “Contrarian Indicator”, as the cover pages of Barron’s magazine have proven to be wrong on several occasions.
Here is the most recent cover story photo followed by a pretty poor history of accuracy.
Each of the headlines above called a top and a bottom in valuations, i.e. positive outlook (bullish) at the top and negative (bearish) at the low.
Like the “Markets in Turmoil” piece above, they could be correct this time. As I remind our WSG client family, “No one knows the future”, including me. But these three examples strongly suggest we are not out of the woods on this correction, yet likely closer to the bottom than most are willing to believe.
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.