Investors are so scared. They don't want to get burned. They've missed out on one of the greatest stock market rallies in history. They think it's too late for them to be buying stocks.
Here's the thing. I think we've barely even gotten started. This is the beginning, not the end.
Last week the Volatility Index saw its highest reading ever with the S&P500 within 5% of new all-time highs.
When people buy insurance at a faster rate than ever before, does that normally happen just before everyone is thankful they had that insurance? Or does that traditionally occur just after the disaster when it's not necessary anymore?
How funny is it that Saturday Night Live mentioned that the stock market is not working on 3 separate skits in the same episode last weekend?
Hilarious.
If SNL thinks the market is broken, that's probably good evidence that the market is working just fine.
When the VIX sees a spike such as last week's, the market has been up 100% of the time over the next 1M and 6M outside of recessions."
ASCPlusWeeklySentimentReport02-02-2021
My Pal @MacroCharts points out the *significant* positive returns on all time frames – and the 12M median at +15.8%."
Something else worth mentioning is the recent collapse in sentiment. In the latest reading from AAII there were actually more bears than bulls!!!!
How is that even possible?
The stock market is making all-time highs, not just in the U.S. but globally. And there are more bears that bulls? Are you kidding me?
By the way, for those who hate the AAII (I'm not the biggest fan myself), we saw similar sentiment readings from the Professional Sentiment polls as well.
Anyway, internally, our latest Market Sentiment Report just dropped:
Please let me know if you have any questions.
JC
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