People are happy when they are making progress and moving forward in their lives. With regards to the financial markets, progress means making money. It doesn’t necessarily mean making crazy returns, but people are generally pleased when their accounts are moving forward in a slow and steady manner.
I’ve talked to many people in the financial world recently and the mood is very somber. For example, there are declines across the board in newsletter subscriptions, seminar attendance, trading room signups, software users, and of course the asset management business. My theory why everything is down is that very few people are making money. Other than traders on Twitter (who never seem to lose #sarcasm), the majority of people have either lost money over the past 2 years or barely made any progress.
This extreme bearish sentiment may be the best thing the market has going for it right now. I wrote last week how the Individual Investors survey showed the lowest number of Bulls in 23 years! I keep hearing investors on the sidelines “waiting for the market to be healthy” and how “we need to overcome headwinds” such as the Fed, China, oil, blah, blah, blah. Personally, I think this is a GREAT sign, as individual investors are notorious for bad timing.
Of course, the market still has some work to do, but I think it’s a great sign that price action is improving as the majority of investors are bearish and apathetic.
I can be reached at: jfahmy@zorcapital.com
Follow me on Twitter @jfahmy
Follow me on StockTwits @jfahmy