Investors have only been more bearish once this century

Nobody sees an opportunity in today’s market…nobody.

Bearish sentiment readings have been piling up in recent months. Family investors are scared. The professionals are afraid. Everyone seems desperate.

That’s good news for us upset folks, though…because we know tough times set the stage for incredible returns. You see, these scary sentiment readings tend to accumulate near market lows – just before stocks spike.

We see that happening again right now. A group of professional investors is the most bearish in three years. In fact, it’s the second-worst reading for this measurement on record.

Similar setups led to 17% gains over the next year. This means the bottom could be near…with big gains along the way.

Let me explain…

Barrons magazine has been a staple of the financial world for over a century. It manages to bridge the gap between finance professionals and retail investors… The professional reader gets great information, while the retail investor doesn’t feel overwhelmed.

It’s important to note that the magazine has been tracking its own sentiment survey for over two decades…

The semester Barrons The Big Money survey asks institutional investors what they think of the market. Just like the sentiment survey of the American Association of Individual Investors I recently discussedthe Big Money poll asks these pros if they are bullish, bearish or neutral.

The latest results came out last month. And as you’d expect, pessimism is nearing an all-time high. Looked…

The most recent poll showed that 30% of pros surveyed are bearish in the market today. This is up from the start of this year. And it’s the second-highest reading on record.

These results make sense. Everyone is scared right now. More importantly, the current level tells us that the end of this bear market could be near.

We’ve only seen four more bearish readings above 25% since the data began in the 1990s. And in each case, it was a good time to buy stocks. Looked…

This century has not been the best for stock returns. The market has only risen 4% per year since 2000. But you can significantly outperform if you buy when the Big Money poll hits these levels.

Similar cases resulted in gains of 3.9% in three months, gains of 5.5% in six months, and gains of 16.8% over the following year. Not only is this massive outperformance, but it’s pretty darn impressive on its own.

The sample size is small. But in each of the four cases, stocks were higher a year later. So while the bottom may not yet be reached, history suggests that it is getting closer. And if you can hold out for a year, the payoffs are a virtual certainty.

Good investment,

Brett Eversol

Further reading

“Before you make a big emotional move in your portfolio, you need to have a clear plan for how and when you’ll get back into stocks,” Brett writes. After the crash of 2008, a lot of money never returned to the markets – and investors missed huge gains… Learn more here.

“Stock declines happen,” writes Dr. David Eifrig. “Don’t fool yourself into thinking you can dodge them all when they strike.” We will likely see more volatility from here. And you need a plan to navigate it – without selling every dip… Learn more here.

MARKET NOTES

HIGHS AND LOWS

NEW RATING HIGHS LAST WEEK

Humana (HUM)… health insurance
McKesson (MCK)… healthcare giant
Gilead Sciences (GILD)… biotechnology
Neurocrine Biosciences (NBIX)…prescription drugs
Hostess marks (TWNK)… cupcakes
elf Beauty (ELF)…cosmetics
Harley-Davidson (HOG)… motorcycles
WW Grainger (GWW)…industrial supplies
ExxonMobil (XOM)… oil and gas
Chevron (CVX)…oil and gas
ConocoPhillips (COP)… oil and gas
Texas Pacific Land (TPL)…oil and gas land royalties
First Solar (FSLR)… solar power

NEW LOWER NOTES LAST WEEK

Microsoft (MSFT)…tech giant
Alphabet (GOOGL)…”world ruler” technology
Amazon (AMZN)… the king of e-commerce
Meta Platforms (META)… social media giant
Fidelity National Information Services (FIS)…fintech
Fortinet (FTNT)… cybersecurity
Taiwan Semiconductor Manufacturing (TSM)…semiconductors
Qualcomm (QCOM)… semiconductors
Zoetis (ZTS)… pharmaceuticals
Edwards Lifesciences (EW)…medical devices
Align Technology (ALGN)… Invisalign
Mohawk Industries (MHK)… flooring
Public Storage (PSA)… self-storage REIT
Ecolab (ECL)…sanitation technology
Newmont (NEM)… gold
Gold Barrick (GOLD)… gold

Robert D. Coleman