“Doing the reverse of the crowd has often worked well,” as New York Times columnist Floyd Norris points out in “Could Bear Talk Be a Contrary Signal?“
So the fact that consumers feel unusually gloomy about the stock market, according to the Conference Board’s latest consumer confidence report, may bode well for stocks.
More than half of those polled expect stocks to decline over the next 12 months. However, as Norris reports:
In the past, there have been only six market cycles when the proportion of bears reached 36 percent. Five of them were excellent times to buy stocks, and the other one was followed by a decent return.
If you only want to read an optimistic spin on these numbers, do NOT read Mark Hulbert’s “The Stars Have Yet To Align For Stocks,” also published in The New York Times.
This blog post is part of a recently launched “Optimism watch” series on this blog.