A big concern for stocks this summer was that there weren’t any bears left.
Most of the silly permabears had given up and moved on to torture investors in other asset classes like Bitcoin or Gold.
Sentiment this summer was a headwind.
And now it’s the opposite. Sentiment is a tailwind for stocks.
Take a look at the sentiment from Financial Advisors and Individual investors. Just a few months back, we saw the most amount of bulls since January 2018, just before stocks all over the world plummeted.
All it took was half the nasdaq stocks dropping 20% for sentiment to mean revert. Take a look at this chart showing that we’re down to levels where bulls historically start showing up, and that’s usually because of an increase in stock prices:
If you’re wondering why stocks should go up, don’t worry about P/E ratios, or fed printing or new technology.
There’s simply a shortage of assets.
There is more money being allocated to stocks and risk assets than there are stocks and risk assets to support that demand.
It’s an asset shortage.
Forget all that other stuff about the biden or the powell or the kardashian. It’s a supply and demand situation. And there simply isn’t enough supply to absorb the demand for equities.
Hence the higher stock prices.
In my opinion, it’s probably something you should get used to.
Here’s what we’re doing about it. Premium Members can access all our trade ideas here.