As I was waiting to pick up my Portuguese chicken take out order at The Red Roster tonight, I overheard a group of people talking at the table next to me. One guy jokingly said to one of his friends "would you like coffee, tee or G?" G was his girlfriend or wife who was sitting next to him. She said "I'm not for sale" and then her boyfriend/husband said something like "well, in this recession we need all the money we can get". This was music to my ears. This little anecdote may not sound like much, but it strongly reinforces the notion I've been talking about in regards to how mainstreet is nowhere close to having a positive outlook about the economy. This guy was still talking about a recession when we have been out of one for well over 1 year. When you hear the average Joe still saying the word "recession" when the economy has already turned the corner and more importantly, when the stock market has gone up strongly for 20 months, still making new high after new high it gives me tremendous confidence that the bull market is far from over. I bet no bull market has ever ended with mainstreet still bearish like this. To top it all off, on the Conan O'Brian show tonight I just heard him say right now "in these tough economic times" during his conversation with one of his guests.
So bears, can you honestly tell me that when the dumbest of the dumb money indicators are still saying the words "recession" and "tough economic times" that bullishness is as high as it was in 2007? LMAO! You are delusional or in denial! Keep grasping at those contrarian straws. The ultimate and most reliable contrarian indicator on a long term basis is the main street schmuck and this indicator solidly favors the bulls.
I don't mean to sound cocky here because the sentiment indicators that bears are citing such as AAII, the VIX, insider selling and such can warrant (but by no means assure) a scary multi-month correction like we saw in the summer...I'm not denying that. But I strongly suspect that this high level of bullish sentiment that supposedly is as high at it was at the 2007 peak is giving bears comfort keeping them on the inverted slope of hope thinking that this bull market has gotta be close to running its course.
This will be my last post before Christmas and so on that note I'd like to wish the handful of you who read this blog a Merry Christmas!
Merry Christmas and Happy New Year to you and your family!
ReplyDeleteMerry Christmas!
ReplyDeleteOne other indicator bears point to that really bugs me is outflows from retail equity funds. I'd say the time to get off the train is when we're seeing record equity in-flows.
Thanks guys. I agree completely with your comment Mo. The retail guy/main street guy will always be the suckers of the market. The most powerful and most reliable contrarian play is to fade them when they are doing the opposite of what the market has been doing. It doesn't get any better than this.
ReplyDeleteI read the "It's official, the bears were wrong" post on your site. The fact that those guys got an overwhelming bearish backlash from people is yet another perfect example of how the schmucks of the market are still bears.
This type of backlash is what bears used to get in 2000 and 2001 after the bubble burst. I remember well because I was a bear at the time! Back then being bearish was just as unpopular as being bullish now. Bizzaro world I tell you! It's also a bit sad because it means that there are so many miserable SOBs out there. Oh well, a bull market needs such victims to feed off of and there's still tons of them out there.