Sentiment

On occasion one of our members from Europe forwards me Strategic Advantage
By Jon Markman.  Although I do not know for sure I believe his employer subscribes (It is expensive if you are interested) In any case from the recent email:

“investment research firm Bespoke has gotten into the business of consumer surveys, and last month they asked a representative sample of Americans to rank their most used and favorite airlines. The top vote getter, and it wasn’t even close, was Southwest. A full 10.3% of respondents said they have flown on a LUV jet in the past month. United (UAL) was the next closest at 5.8%, followed by Delta (DAL) at 4.9%, American (AAL) at 4.6%, and JetBlue (JBLU) at 2.3%.

Note: I am a big Jet Blue fan and not so much Southwest. Although I will be flying Southwest on Vacation in a couple of weeks. Another story for another time.

As long as we are on the subject, here were some more survey findings that I found interesting. — Just 46.2% of survey participants said that they invest in stocks, bonds, commodities, real estate or other financial products. This fairly low level supports my belief that the bull cycle has a ways to go, as there just is not that much participation. When there’s a real bubble, the participation rate will likely be above 55%.

— Of the investor cohort, only 42% said that they follow the stock market on a regular basis. When asked how concerned they were about a market crash in the next year (-25% drop), 34.8% said they were not concerned, while 10.5% said they were very concerned. My view is that it’s good there are still some that are very concerned.

— In terms of investor sentiment toward stocks, 17.5% are bearish, while 28.9% are bullish, according to the Bespoke survey. There are definitely more bulls than bears, but bullish sentiment is still low, which is a positive for the market. When bullish sentiment begins to tick sharply higher, that is the time to worry about a market top being put in.

— When asked if they expected their household income to change in the next six moonths, the majority said they expected their income to stay the same, though a higher proportion of the remaining respondents said they expect their income to rise, which is positive without being grossly out of whack.

— My summary view is that the public is generally resigned to a low-growth environment where stocks are for the most part too boring to pay much attention to. Again, this is a positive as it means there is a lot of headroom for positive sentiment in the future. You are there early, which is a good thing.

Personally I have never been a big fan of sentiment unless it is extreme on a longer term basis. Most traders I know seem to look at it very narrowly in short time frames. Maybe it works for them, I hope so 🙂

Oh and a little anecdotal note, over the weekend I visited the local Barnes and Noble. I was looking for some light reading over vacation.  I noticed that the Business/Investment section usually in the second row, was not there. I became curious and looked for it. All the way in the back of the store, well hidden so to speak. The public is not in the market or at least not investing on their own.



Talking Points and How not to be ignorant about the world: 

A Scary World, but Investors Trust the Fed (Money Beat)
How ‘Keynes’ Became a Dirty Word (Bloomberg View)
THE IOT AS THE THIRD WAVE OF THE INTERNET (Goldman Sachs)
How to Preserve Capital During a Bear Market (Wealth of Common Sense)
Carol J. Loomis: The Fortune legend & Buffett biographer talks about 60 years in business journalism  (Columbia Journalism Review)
Housing: “Price cuts are back” (Bill McBride)
Six Years After Lehman’s Bankruptcy, Wall Street Is as Reckless as Ever (Fiscal Times)
On Death and iPods: A Requiem (Wired)
Smart Beta: Not New, Not Beta, Still Awesome (Cliff Asness)
A Role Reversal For Stocks and Bonds (A Wealth of Common Sense)
Why the Guardian is smart to bet on live events and a membership model instead of paywalls (GigaOm)
Notes on the Celebrity Data Theft (Nik Cubrilovic)
Life Atop Ground Zero: Thirteen years after 9/11, the World Trade Center is undergoing a massive transformation. What has life been like above the site? (Medium)
Instant Gratification: As the economy gets ever better at satisfying our immediate, self-serving needs, who is minding the future? (American Scholar)

How not to be ignorant about the world

Have a Great Day!