Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

In this Discussion

Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

    Support MFO

  • Donate through PayPal

AAII Sentiment Survey, 7/13/22

For the week ending on 7/13/22, Sentiment remained very negative: Bearish remained the top sentiment (46.5%; very high) & neutral became the bottom sentiment (26.6%; low); bullish became the middle sentiment (26.9%; very low); Bull-Bear Spread was -19.6% (low). Investor concerns included recession; inflation & supply-chain disruptions; the Fed/FOMC; market volatility (VIX, VXN, MOVE); Russia-Ukraine war (20+ weeks). For the Survey week (Thursday-Wednesday), stocks were down, bonds up, oil down, gold flat, dollar up. #AAII #Sentiment #Markets
https://ybbpersonalfinance.proboards.com/thread/141/aaii-sentiment-survey-weekly?page=6&scrollTo=702

Comments

  • edited July 14
    Nothing you can do in this environment
    Sit tight
    No safe haven except maybe cash but may depreciate soon once market (maybe ? 6 9 months) recovered
  • It has been a pretty long stretch already with poor Sentiment (a contrarian indicator).

    Q2 earnings season has bad reports from big banks (JPM, MS, etc).

    Then we have 75-100 bps rate hike by the FOMC in about 2 weeks.

    Will mid-June market lows hold or are we going below?

    Keep seatbelts ON and hang on tight.
  • 75% chance 100 points raised per Vegas I meant Wallstreet analysts
  • Fed fund futures market is going haywire showing 80% for 100 bps, followed by 75, 25, 25 to end at 3.75-4.00% in December.
    https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
  • Thanks @yogibb. The rate forecast looks outright brutal by year end unless inflation slows down.
  • edited July 14
    I didn’t want to start a separate thread, so hope no one minds by adding some possibly related thoughts … (2)

    - Maybe I’m naive, but I’m sensing some kind of capitulation in the broader equity markets just staring at the numbers, including a 600 point early morning downdraft in the DJI today. Personally, I’ve been adding bits and pieces across the board to various types of equity holdings, including a recent stake in ARKK. Albeit, I may be completely wrong. Furthermore, even should the markets stop or slow their rapid decent, there’s no assurance they won’t later fall much further.

    - I spoke to an acquaintance yesterday who has been retired 10 years with no pension. Surviving on Social Security. Little in savings. Owns a home. Not a very prudent course financially of course! However, did very well managing $$ during the past decade of inflation (0-3% as measured by the CPI). Individual is utterly “lost” in this new era of 8-9% inflation. Have to feel for folks like that. Perhaps this anecdote relates to the “Sentiment Index” in some small way.
  • There have been days when I thought people were throwing the baby out with the bathwater (i.e., capitulating), at least with respect to certain corners of the market, but I've been wrong thus far. After years during which my personal rate of inflation far outran the official numbers I'm now finding that those numbers are exceeding my cost of living increases (I'm paying more for gas and food but not rent, a mortgage refinance, a new or used car, etc.). Pretty soon it looks like returns on my cash could be catching up with what my mortgage is costing me in interest (2.75%). I've been dribbling money in, to absolutely no positive effect thus far. So, bringing this all back to the OP, I'm in the "bearish" sentiment category also.
  • It has been a pretty long stretch already with poor Sentiment (a contrarian indicator).

    Q2 earnings season has bad reports from big banks (JPM, MS, etc).

    Then we have 75-100 bps rate hike by the FOMC in about 2 weeks.

    Will mid-June market lows hold or are we going below?

    Keep seatbelts ON and hang on tight.

    Indeed.
  • Dan Rosenberg has lately asserted in an interview we may get to 3,100 in the SP500. Just kill me now. (?????!!!!!). The thing to do, maybe the ONLY thing to do right now, is to hang on tight and keep a long-range view in mind.
  • edited July 14
    From sfnative “I've been dribbling money in, to absolutely no positive effect thus far.”

    Not to quarrel with your assessment or timing methodology …

    But a reminder to all that it took roughly 15 months for the last bear market to reverse course. Fell from the fall of ‘07 (October methinks) until turning up in March 2009. And that 15 month time span was considered “brief” by historical norms.

    One never knows.
  • A thought to hash over. If & when the holders & nibblers get back to even will you cash out & go to something with less risk ? I've started to buy a few CD's, buy just maybe it's time to do some more nibbling. ???
  • edited July 15
    Derf said:

    A thought to hash over. If & when the holders & nibblers get back to even will you cash out & go to something with less risk ? I've started to buy a few CD's, buy just maybe it's time to do some more nibbling. ???

    @Derf - I do not think in terms of “getting back to even.” Why would you pick an arbitrary starting point (ie 3 months back, 1 year back) and than feel somehow beholden to it? Investing is a long term process (if not life long). I suspect you and many others here have been very successful investing over many years.

    To the question of adding risk incrementally during less expensive markets and than taking it off the table when the plate overfills, that’s pretty much been standard operating procedure with me for decades. If you try to remember that you are buying companies that you believe have good long term prospects based on current valuations as well as a modicum of hard assets that might protect you during a prolonged price spiral, than you don’t worry much about “loosing” money over 1 or 2 years.

    I think a lot of traditional investment maxims have been thrown out the window by a great many investors over recent years … some of them coming home to bite now.

    - Don't invest in stocks if you’re going to need the money in less than 5-10 years,

    - Diversify broadly across asset classes and geopolitical regions,

    - Stay away from highly levered products or ones that you don’t fully understand,

    - Keep a healthy cash reserve so you don’t need to sell more volatile assets during times of stress,
  • Markets don't move in a straight line. So, yesterday was down (although not that bad) on lot of negative news, but they are happier today. Anyway, mid-June lows stand so far. Charts are from 1/4/22 top - 1st for major indexes, 2nd for some generally thought conservative stuff (moderate-allocation, core & core-plus bonds, ST bonds).

    https://stockcharts.com/h-perf/ui?s=$SPX&compare=$COMPQ,$INDU,$TRAN,IWM&id=p86291292782

    https://stockcharts.com/h-perf/ui?s=VWELX&compare=VBINX,BND,FBND,BSV&id=p74410558285
  • Bloomberg has two columnists with close to opposing views. I am pretty sure you need to subscribe to read these but

    https://www.bloomberg.com/opinion/articles/2022-07-14/how-many-months-until-the-fed-brings-inflation-nearing-double-digits-to-a-peak

    Takes the view that inflation will continue until there is a sever recession, implying significant more ( 20%) downside

    He points to "sticky" inflation ie large ticket items that are harder to reprice quickly like gas and food, is starting rise quickly, and rents are usually reset on yearly leases

    Still the expected fed funds hikes have not increased much since February and still predict cuts in 2023. The market clearly thinks "peak" inflation is in sight but the question is how far ahead and does it destroy economic growth in the process and lower earnings take the market down much further

    The opposing view

    https://www.bloomberg.com/opinion/articles/2022-07-13/inflation-alarm-bells-are-actually-getting-softer


    "Bond investors showed that they expect inflation to cool by betting that the gap will narrow between the yield of inflation-protected US securities and ordinary Treasury bonds. The rates on these bets actually plummeted on that day, with the two-year breakeven measure falling to 3.29% from 3.45% and the 10-year rate declining to 2.34%, the lowest point since 2021, according to data compiled by Bloomberg."

    And Consumer surveys show most expect even gas prices to be much lower in the years to come. Most are in fairly good shape economically as long as prices come down

  • @hank : I'll restate my comment. Is it time to leave the market & invest elsewhere. Is it possible Mr. Market will take more than a break & & wallow for a number of years in a quagmire ? Until the easy money flows no more & the Fed pulls it head out of it's a.., I see no relief in sight.
    Hope I'm wrong, Derf
  • Even after the recent decline, valuations are still almost at historical levels. Less so for Energy Commodities and value type stocks
  • edited July 15
    Derf said:

    @hank : I'll restate my comment. Is it time to leave the market & invest elsewhere. Is it possible Mr. Market will take more than a break & & wallow for a number of years in a quagmire ? Until the easy money flows no more & the Fed pulls it head out of it's a.., I see no relief in sight.
    Hope I'm wrong, Derf

    :) :) - Would some other folks please address? I seem to have lost my crystal ball. From a linguistic standpoint @Derf’s insertion of “is it possible?” would seem to require an affirmative response.

    Was it Patrick Henry who demurred “I know of no way to judge the future but by the past”? That’s true of many things in life. There’s a rich history of equity, bond, real estate activity dating back at least to 1929. I still remember exactly where I was and what I was doing in 1987 when the Dow fell about 25% one afternoon.

    I’ll share a couple biases here: I don’t pay a lot of attention to forecasts in making investment decisions. Even if a particular forecast (inflation, interest rates, GDP, recession, etc.) proves correct, it’s likely those much brighter, more sophisticated and better informed than we have already preemptively acted on that forecast (driving asset prices) before we can. Another bias: An object in motion tends to stay in motion. Very true of different assets today. Folks continue to pile into winning positions. SARK has likely attracted far more assets in recent months than ARKK. This pushes assets to extremes. True of many other assets. Of course, eventually a rolling ball strikes a wall. It it’s a snowball it has picked up mass and momentum along the way. You get the idea …
    -

    @Derf is one of our most respected and informed posters. He raises interesting questions. To me they relate to the central question of why we invest. Mostly I view my own modest assets as long term contingency reserves that may or may not be needed before I depart for the lovely Andromeda Galaxy. Withdrawals to supplement SS and pension are small compared to the nest egg. Your needs / reasons for investing might be completely different.
  • @hank : Your last paragraph is stated perfectly.
    Have a good weekend , Derf
  • Point of interest from McClellan: the usual relationship between the copper/gold ratio and T yields is about as out of whack as it gets. Details here.
Sign In or Register to comment.