In my 19 years of trading, I’ve never seen so much bearishness, fear, and apathy, especially with the market at all-time highs. I’m not talking about the long-only, buy and hold crowd. Those people are always bullish and they NEVER sell. They just ride the market all the way up, and then all the way down during corrections. I’m mostly talking about the trading community, potential clients I talk to, and many of the sentiment surveys.

Sentiment can be difficult to interpret. Why? Because there are so many different surveys and measures: Investors Intelligence, AAII, Short Interest, NAAIM, Put to Call ratios, ISEE, etc. Some of these indicators are bullish while others are bearish…in the same week!

Most of the recent surveys are showing a HUGE percentage of people who are “neutral.” They are scared to lean bullish because “we have come so far without a correction,” and they can’t be bearish because calling for a correction over the past 2-3 years just makes you look dumb. I interpret the large neutral reading as fear. I think the Financial Crisis of 2008 is still fresh in everyone’s head and no one wants to get burned again.

Many traders I talk to are scared. They might be long the market, and some are even on margin, but they all have “one foot out the door.” Any little sign of trouble and they are ready to sell their longs, rush for put protection, and buy those stupid VIX products that do nothing but torture them and eat away at their profits. My other friends who were big time gunslingers in the late 1990’s are nowhere to be found. They are very apathetic about the market and have ZERO interest in getting back in.

Personally, I love all this negative sentiment. I LOVE having conviction in my ideas and sticking with the trend while many are so jittery. I recently opened my managed accounts to new investors and I’ve been talking to so many people over the past week. The majority are scared. Many are interested in investing but they want to “wait for a correction” before they get back in. Some have even been out of the market for the past 6 years. I feel sorry for those people but there’s nothing I can do about it. As Red said in Shawshank Redemption: “It’s a terrible thing to live in fear.”

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