FYI: ver the last couple of decades, the International Center for Finance at Yale University has regularly surveyed both individual and institutional investors and asked them about their views of the market. There are four major questions: one year confidence, buy-on-dips confidence, crash confidence, and valuation confidence. We’re going to focus on two of those today: “one-year confidence” and “valuation confidence”. One-year confidence is the percent of investors expecting a positive return for the Dow Jones Industrial Average over the next year. Valuation confidence is the percentage of investors who are confident in the valuation of the market, meaning they think the market is valued either too low or about right. The confidence indices are shown for both individual investors and institutional investors, and we highlight charts of the two readings below.
As you can see in the “One-Year Confidence” chart, according to Yale’s survey, investors have gotten crazy bullish on stocks over the last few months. Institutional investors are extremely bullish: less than 2% don’t expect gains for the Dow over the next year! Individual investors are the most bullish since February 2004, when 93.4% expected gains. Currently, over 90.9% expect further gains.
While investors are crazy bullish on the market over the next year, they aren’t attracted to the market’s valuation. As shown in the second chart below, a historically low share of investors think the market is cheap; Valuation Confidence from both individual and institutional investors is near the lowest levels on record.
Regards,
Ted
https://www.bespokepremium.com/think-big-blog/irrational-exuberance-reading-explodes-higher/
