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posted on 12 October 2017

Is This The Most Hated Bull Market Ever?

Written by , Clarity Financial

This past week, my friend and colleague, Dana Lyons, penned the following note:

“Perma-bulls like to label this bull market the ‘most hated’ in history. While the rally is historic by some metrics, the ‘most hated’ status, to the degree that it was ever applicable, has certainly fallen by the wayside by now. To be sure, there are plenty of vocal and visible perma-bears that have been spewing copious amounts of ‘hate’ at this rally for years now.

However, if one steps away from the confines of financial social media and guru-dom, evidence shows that public sentiment has grown to now reflect among the most bullish conditions in recorded history."

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I agree. As I noted in Friday’s post entitled “A Bull Market In Complacency," both our indicator of investor exuberance and equity allocations concur with Dana’s point.

Dana also denotes another indicator hitting excessively bullish highs.

“One example comes from our Chart Of The Day based on the University of Michigan’s Survey of Consumers. One of the questions asked of respondents in the survey is their estimation of the ‘probability of an increase in the stock market in the next year’. Among the various ways that UM breaks down the data is by taking the mean response to that question. And in August’s survey, the mean response came in at 62.7%.

That trails only June 2015‘s 63.1% and joins July 2007‘s 62.2% as the only 3 readings above 62% in the history of the survey."

And, as Jesse Felder noted this past week, the long-term return outlook is exceedingly poor.

“As Mr. Buffett has famously said, “the price you pay determines your rate of return." Because investors are paying one of the highest prices in history, according to this measure, they are likely to experience some of the lowest future returns on record. In fact, this measure now suggests they will experience an average annual loss of 2.8% per year over the coming decade."

Oh, just in case you didn’t notice those charts just busted some of the most commonly held beliefs:

  • There is NO CASH on sidelines
  • Markets DON’T return 8% a year, and;
  • Investors are all in.

Hate doesn't seem to be on the menu at the Wall treet restaurant.

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