The latest data from the AAII shows just how confused investors are regarding the current market environment and whether the recovery is real. Just 10 days ago the market was in the middle of a minor 6% decline and it appeared as though earnings were largely priced in and that economic data was beginning to disappoint. Markets tanked nearly 3% the day before Halloween as comments from Carl Icahn and Wilbur Ross spooked the market. Same store sales compounded the fears. Investor sentiment tanked to it lowest level since the March 8th low. A few earnings reports and economic reports later and the market has rebounded over 7% and psychology skyrocketed. Although we’re not quite at a psychological extreme this uncertainty is likely to persist and paying close attention to the psychological extremes will likely continue to reward investors as the economy continues to confound investors.
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.