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Public Pessimism At an All-Time High: Time to Buy
Wall Street would love to buy your stocks right now.
I’ve mentioned many times how the “herd mentality” is almost always late and wrong. I saw an interesting article on CNBC this morning that I wanted to show you.
Public pessimism on the economy hits a new high, CNBC survey shows
A record 69% of the public holds negative views about the economy both now and in the future, according to the latest CNBC All-America Economic Survey.
President Joe Biden’s approval rating fell by 2 percentage points to 39% and his disapproval rating rose by a point to 55% compared with the November survey.
Just 24% say now is a good time to invest in stocks, also the lowest reading in the survey’s 17-year history.
When I see a statistic that says pessimism is at record highs, I become interested in being an optimist.
People I’ve run into lately who I NEVER would expect to talk about economics are all of a sudden talking about a recession. That means it’s probably time to be optimistic.
If only 24% of respondents think this is a good time to buy (all-time low), then that tells me that “buying” is not a crowded trade; which makes it more attractive to me.
(this is akin to the Dot-Com bubble, when taxi cab drivers in NYC were talking about what tech stocks to buy; or the Crypto Bubble of 2021, when coffee baristas all of a sudden were YouTube investment experts. If average people are talking about a recession, there probably won’t be one).
Don’t Forget Gridlock in DC: Buy, Buy, Buy
In a popular post last year, I talked about how the Dow Jones averages an almost 50% return from the midterm low (i.e. 2022) to the next year’s high (i.e. 2023).
That’s because when there is a gridlock in DC, which often happens after the midterm election cycle, no new regulations come out.
Without regulation, that brings certainty (for the short term). And certainty is good for stocks.
So what’s happened since the midterm low in October, 2022? Well, we got gridlock in DC, and…
Dow Jones: The low came in at 28,660. It’s currently at 33,879. That’s an 18% return since October!
S&P 500: Currently at 4,155, the low in October, 2022 was 3,492, 18.9% return!
And the NASDAQ? Currently 12,182, the low in October, 2022 was 10,089, a nearly 21% return.
Don’t forget, the Dow has been lagging the S&P and NASDAQ, but the average return to the next year’s high is 50%… That means the NASDAQ could print well higher than 50% returns, if the the trend underway continues.
If you’re trying to short this market or think a recession is pending, you’re on the wrong side. The herd is always late and almost always wrong.
Wall Street would be happy to buy your stocks right now.