Investors are increasingly confident in the recovery story. According to Investors Intelligence survey of 140 newsletters just 16.7% are now bearish. This is the lowest reading since June of 2003 after stocks had rallied 30% from their 2002 lows. Curiously, the survey also showed that 33% of investors expect a correction of 10%+ – also an abnormally high level. Michael Burke and John Gray, editors of the survey, called this phenomenon “very unusual” and believe it could be setting the table for a market top:
“As the markets often confound expectations, we could see a year-end rally to new highs that could force the correction camp to capitulate and buy on strength. That, we think, could mark the top.”
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.