Posted on 01/10/2012 9:50:47 PM PST by blam
Investors Haven't Been This Worried About A Stock Market Crash In Years
Sam Ro
Jan. 10, 2012, 7:21 PM
The Yale School of Management regularly surveys individual and institutional investors on their stock market crash confidence. Specifically, they ask the survey taker how confident he/she is that the there won't be a stock market crash within the next six months.
According to the latest read (h/t Bespoke), crash confidence is at its lowest level since early 2009. In other words, investors are increasingly worried about an imminent market crash.
However, this could also be a bullish contrarian indicator. Back in 2009, this similarly low reading in the crash confidence index was followed by a monster bull run in the stock markets.
From Yale:
Confidence that there will be no stock market crash in the succeeding six months generally declined (though with a lot of ups and downs) over the years since 1989 until the stock market bottomed out in late 2002. Just after the terrorist attacks of September 11, 2001, Crash Confidence actually rose a little. But Crash Confidence reached its lowest point at 20.79% for institutional investors and 28.95% for individual investors as of November 2002. Crash confidence reached its all-time low, both for individual and institutional investors, in early 2009, just months after the Lehman crisis, reflecting the turmoil in the credit markets and the strong depression fears generated by that event, and is plausibly related to the very low stock market valuations then. The recovery of crash confidence starting in 2009 mirrors the strong recovery in the stock market.
(snip)
(Excerpt) Read more at businessinsider.com ...
Mixed in his predictions are calls for housing prices to decline another 20% and for the heathcare industry to experience "explosive growth."
Yes, it could be, and might well be. But I would point out that investor sentiment (which is usually wrong and generally a very good indicator for contrarians) reached the kinds of "nadirs" the author is talking about not so much on particular *dates* but at particular *levels*...very LOW levels. We are not especially "low" in the markets here. Oh sure, we are low compared to where everyone thought we would be when they looked out over the brave new world of Y2K. But not low. On a valuation basis, we are lowish, but certainly not at bargain levels, and there is a whole separate issue now with regard to the complete regulatory indifference to massive, massive accounting fraud. It is simply never prosecuted nor policed.
From March 2009, I will say with confidence that the gains seen in many, many stocks will almost certainly *never* again be seen in the lifetimes of anyone reading this board. Dow Chemical, $6 to $32. CAT $24 to $110. LVS, ridiculous. 4, 6, 8, 10, 15, 20 baggers all over the place. We will almost certainly NEVER see those kinds of % gains in 2 years again.
But for those kinds of gains to recur, *from these levels* we would be talking about DJIA 20,000 or more. Color me skeptical. Crash? Possible. Even likely. But not quite yet. There's plenty more money for Wall St. to steal from individual investors.
And one last thing I will point out that I think is very important to kind of let sit in your mind and ponder: The averages, the SP, the DJIA, the NAS (QQQ) the Russell (TF).... with the advent of high-frequency trading, these averages no longer have to make "oooh, look at that" highs to make substantial money for Wall St. No, they can stay in fairly confined ranges, say 150-200 SP points, and make fortunes for the compu-masters running the show.
So this could mean there will be a crash, or it could mean there won’t be a crash. Useful information, that.
We have 6 more years of pain, at a minimum.
I haven’t had a dime in the stock market for 3 years. I’m not about to give those crooks any more of my blood, sweat and tears. It’s all about metal and tangible consumer items, and more self reliance. And will be until Europe stabilizes, unless it is our FED that prints their stabilization fund. If that happens all bets are off. Our dollar will be worthless too.
How To Prepare For The Difficult Years Ahead
"Eventually, this thing is coming all the way down. Someday America will be such a horror show that it will be hard to believe that it is the same place that many of us grew up in."
Luv it!
“Investors worried about a crash...”
“Could be a contrarian indicator...”
Wow. Ya think?
Double speakin, lying, thieving sunsabeeches...
---- Harry Truman.
Hum, well let me think real hard here:
I wonder which institution with all it’s pension and retirement money in THEIR market, and their automatic fee brokers, are going to make sure their market pension/retirement amounts are protected and EXEMPT from a possible fall?
Could it be the same ones that made sure they were EXEMPT from Phony-Care perhaps?
And could it be they’ll be sure to always keep their salaries HIGH and EXEMPT above rising food and commodity prices, while everyone else gets little if no raises and near zero return on their savings?
That doesn’t mean there won’t be good buys in the future. If the market fell 25%, which it could easily do, I would be looking around for oversold names.
Oh absolutely, in fact, your take is exactly what I meant to imply and probably forgot to say. I was using subtractive synthesis and never stated my point!
I definitely think there will always be a stock market, and, it will always have an upwards bias. It has to, otherwise it would cease to exist. One’s entry into same (as a bullish investor) bears an indeterminate degree of risk/reward vs downwards peril. This is our job, when evaluating whether we are in or out of it. (Or, short) If you invest near the top, in a tired market, your downside risk is large, compared to your upside. My own belief is that we are closer to an interim top than an interim bottom and would be carrying smallish size at this juncture unless I already owned it all from lower prices and had cushion.
Volume, by the way, sucks of late. Remarkably poor.
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