An important indicator for future stock prices is the level of pessimism. With current stock indices in nose bleed territory, it seems logical to presume that since prices are too high, a correction is imminent. The bubble is about to burst. Those of us old enough to remember black Monday of October 1987 have seen it happen.
Take a look at this article: Increasingly Bearish Investors Seek Long-Term Value Creation.
Maybe, just maybe, all this pessimism is telling us that there's a lot of cash sitting around uninvested. And that might be signaling a buying opportunity. But wait a sec. "Almost three-quarters of the survey respondents were portfolio managers ...". Portfolio managers are supposed to be smarter than the individual investor, so we'd best take a look at the AAII Sentiment Survey. Their results as of 12/13/2017 appear below:
Their latest survey shows a dip in bearishness and a rise in bullishness. That disparity between portfolio managers and individuals might suggest that maybe now isn't the time to buy after all.
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12:16 PM 12/16/2017
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