This has become a regular theme in the 2016 political cycle. And it was a famous line uttered by fictional network news anchorman, Howard Beale (the late Peter Finch) in the 1976 motion picture, Network. This is not only a theme with the electorate, but it also seems to be working its way into the realm of the general divesting public. However, based on the performance of the market since the lows of 2009, maybe the quote should read, I’m mad as hell, and I don’t know why anymore.
According to Josh Brown, CNBC contributor, CEO Ritholtz Wealth Management and blogger “thereformedbroker.com” there is “Anger at 18000” on the Dow Jones Industrial Average (and 2091 on S&P 500).
The anger about the new all-time high the S&P 500 is currently approaching is palpable. Take my word for it, I read everything and everyone.
The 14.5% rally off the February lows, on nothing but worsening earnings and cuts to GDP forecasts has people utterly furious. I’m trying to remember a time in which stocks were on the verge of a breakout and people were so angry about it. The Dow just broke above 18,000 for the first time in nearly a year, and no one wants to even smile. (FYI, this is known as the ‘wall of worry’)
Another sign of investor dismay can be seen in this headline from Shawn Lanlgois and MarketWatch, “People are falling out of love with stocks in a big way.” According to Langlois, a recent Gallup poll found that only 52% of Americans currently have money invested in the stock-market, down from 65% at the recent peak in early 2007 and that this represents the lowest equity exposure for individuals since the survey began 19 years ago. This would date back to 1998, a period pre-Tech Bubble. The S&P 500 stood at 970.43 January 1, 1998. It would gain another 60% by the peak in March of 2000. The reading at that peak was 62%. Of course, at the peak, the public and the media had all come back, touting stocks as an investment for the long-haul. Fifteen years later, after a tumultuous decade and half with the S&P showing an average gain of only 2.3% per year, they continue to shun stocks.
I have said this before and will say it again, bull market tops are not made in periods of extreme pessimism and loathing of stocks. They come in periods of euphoria and invincibility. Does this preclude steep market reversals from here? Absolutely not! What it should indicate is that there appears to still be considerable upside from here; and, that maybe we should focus more on what could go right, as opposed to what could go wrong. Also, when the media begins to change from its consistent negative slant on the market to a more positive view, that is when you should become more cautious.
Finally, The Price Action Lab Blog says that once again, the prophets of disaster have been knocked back by those market highs (referred to earlier). It argues there are just two types that make long-term calls about the market: the inexperienced and the psychotic. Read more here. (MarketWatch) As I am not inexperienced, I must be psychotic. Remember, too, I am not forecasting time or price, just that the market will probably go higher over time. Two centuries plus of US market history would tend to back up that opinion. (Jeremy Siegel–Stocks For The Long Run)
What do you think?
P.S. With oil prices having stabilized around $40 per barrel, I knew it would be just a matter of time before this narrative showed up: “With gas prices up over 4% in the last week, how much pain are we going to feel at the pump this summer?” Scott Wapner, CNBC
They are transitioning from the negatives that falling oil prices portend to the negatives that rising gas prices signal for the consumer. Interestingly, they never focused on the benefit that falling crude and gas prices had all the way down. BTW, those plus effects are still at work, as the price of regular lead-free gas is still down over a buck and a half from its peak. With the media it is always the same. Heads you lose, tails you lose.
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