Tags: survey | investor | sentiment | bear

Bears Fall to Lowest Level Since 1987 and That Means . . . Nothing

By    |   Friday, 12 Sep 2014 08:07 AM

According to one survey of money managers, the number of bears has fallen to the lowest level since 1987. This is being interpreted by some analysts as a sign the end of the bull market is near. A more rational analysis is that a great deal has changed since 1987 and this survey doesn't mean a crash is imminent.

Surveys have been widely used to measure market sentiment since at least the 1950s. Money managers and other groups of investors are asked whether they expect the market to go up or down in the next six months.

Investors Intelligence conducts a survey of more than 100 investment advisors and has published the results since 1963. In the most recent Advisors Sentiment Survey, just 13 percent of the advisors expect a bear market.

Surveys suffer from a selective interpretation. Bearishness rises and falls and the surveys will occasionally catch important turning points. The rare instances when the surveys catch big moves are remembered and the dozens of incorrect signals that developed are ignored.

In 1987, investors were bearish but that had nothing to do with the crash. Portfolio insurance involving the futures market and stock prices created a perfect storm for the market. Those conditions don't exist today because investors and exchanges learned from that mistake. Despite that fact, 1987 haunts many analysts.

This is not 1987. The number of bears will rise as it always does, and then it will fall again shortly after that. Instead of watching surveys, investors should watch the price action and until prices fall, the market is in an uptrend.

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MichaelCarr
According to one survey of money managers, the number of bears has fallen to the lowest level since 1987. This is being interpreted by some analysts as a sign the end of the bull market is near.
survey, investor, sentiment, bear
265
2014-07-12
Friday, 12 Sep 2014 08:07 AM
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