"Investors Are Gorging On Hyper-Bullishness As Turkey Day Nears"

  • New concerns are raised over a big jump in investor sentiment
  • Both the Investors Intelligence and AAII surveys show moves to levels well above historical averages
  • The Media flashes caution signs, as usual, without perspective …
  • I still contend we are in the midst of secular bull market. Ignore the noise 

Okay, my title is click bait

Before going on, this is not my title. It belongs to Randall Forsyth, Barron’s magazine’s “Heard on the Street” guru. It represents a photograph, an instant in time, of a constantly changing and shifting market. It is presented without context and it is design to tap into our base instinct to focus on fearful information. Generally speaking going against the thrust of articles such as the one covered by this link is good investment policy. You need a Wall Street Journal or Barron’s subscription to view.

No question hyper-bullishness is bad

It would be really bad if this hyper condition had gone on for a prolonged period, a la the tech bubble of the late 1990s. What we are seeing here has been going on for only a couple of weeks (since the first vaccine announcement from Pfizer). It is the final undoing of the panic we entered into in late February when the market had ‘abandoned all hope’, assumed Covid=19 was end of the world… an infinite problem.

Well, it is not infinite and those stocks that languished during the past few months as the covid/economically impervious big technology names held the field have played a little catch up (since 11/9/20-Russell 2000 +8%, S&P 500, dominated by big tech performance + 1.4%). The Nasdaq composite was mostly flat during the period. We may be overextended in the short term but for most stocks we are certainly not in bubble territory.

The case for hyperbullish sentiment

Randall Forsyth

Forsyth cites a significant bump in investor sentiment.

“Investors Intelligence also found that 59.6% of advisors it polled in the latest week were bullish, up from 59.2% in the previous reading, while the percentage of bears fell to 18.2% from 19.4%. The spread between bulls and bears exceeded 40 percentage points, a level of exuberance that tends to be seen at market tops.

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Disclaimer: The information presented here represents my own opinions and does not contain recommendations for any particular investment or securities. I may, from time to time, mention certain ...

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