Today another all-time high was reached for the DOW as it surged over 21,000. The NASDAQ is approaching 6,000. Even before today’s large gains a phrase often attributed to Warren Buffet started appearing in my mind. That phrase is “Be greedy when others are fearful and fearful when others are greedy”.
The myICLUB.com Investment Club Sentiment Index has been climbing and today reached a high of 68%. This survey is of users of the myICLUB.com investment club accounting software. You can see a graph of the past 2 years at
https://www.myiclub.com/club/reports/sentiment.aspx.
The CNN Money Fear and Greed Index now registers an 81 which is in the Extreme Greed range.
http://money.cnn.com/data/fear-and-greed/ These are not the only indices showing investor sentiment at or near peak levels. I checked others from Barrons and TDAmeritrade. A quick web search on "investor sentiment indicator" will find many.
I saw a little bit of cold water thrown on the enthusiasm from a Well Fargo analyst during a TV news broadcast. He compared the current sentiment to the dotcom bubble.
While the economy has had some good news and forecasts generally have it moving steadily but slowly, does this news justify the current market enthusiasm? Or are markets expecting a perfect storm of changes from the new administration?
The big question remains, have the others moved into the greedy category and it is now time to be fearful?
Russell Malley
StockCentral Community Leader