A quick check on AAII’s sentiment survey reading for July 31 showed bullish sentiment rose to 40%, from 35.8% on July 24 and bearish sentiment fell to 41% from 44%. Not surprising, our Anxiety Index went down. Just two weeks ago, bullish sentiment was a lot less and bearish sentiment was a lot more than average. Can a normal investor make sense of this sudden shift?
Well, Mr. Market is not a normal investor but he surely is helpful. For instance, on a recent tour boat trip down the Florida Everglades, Mr. Market heard a thrashing sound in the waters. Curious fellow that he is, he got up from his seat and ambled over to the railing. The sight of a 3,000 point alligator (aka meat grinder) sniffing around for dinner got Mr. Market all worked up, which happens every so often. He got so excited and made such a fuss that all the other passengers jumped out of their seats and hurried over to the other side to see what all the excitement was about.
Now, let’s think for a minute. Hearing all the hubbub and seeing 100 passengers going to the other side of the boat and leaning over the railing to get a good look at whatever it was that Mr. Market was enthralled over, would you grab your digital camera and say to your spouse, “Honey, I’m gonna get me a picture of that alligator if that’s the last thing I do!”
Or would you keep your seat and your cool, ignore the crowd, and locate the nearest life preserver storage box and lifeboat?
Click this not-so-exciting chart to open a larger not-so-exciting chart –