Econintersect: There is a classic saying in investor circles to the effect that markets don't go down until a maximum number of people have been enticed into stocks. That may not fully apply to markets in 2013 since stocks have not been highly popular since the the 2008 crash, but the high volatility in June followed a post crash high in investor optimism according to the Wells Fargo/Gallup Investor and Retirement Optimism Index.
What is concerning investors? The biggest factors are political: the top two, and five of the top seven concerns are political, as shown in the following table.
Over the past two years the concern about Washington gridlock has risen by more than 40% while concern about unemployment and the Federal budget deficit have declined.
Even though the May confidence level was the highest in more than five years it was lower than all but one reading since the mid-late 1990s. This is reflective of the observation that the stock market rally from the March 2009 low was one of the most-hated in history.
- U.S. Investor Optimism Soared Before Market Turned (Dennis Jacobe, Gallup Economy, 21 June 2013)