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All of a sudden, it’s fun to be a market bear. For 13 years, between 2009 and 2022, the bulls looked at the alarmists as outsiders. They argued that we’d deal with the national debt in 30 years.
It hasn’t been 30 years, and the problems are now here. The bears are now putting aside any bullish progress and calling it a bear market rally… focusing only on the negative.
The retail public and its sentiment can be gauged by looking at new account openings on the Robinhood app or by looking at trading action in Tesla stock, and I can tell you that they’re nearing real capitulation.
But the most accurate way to really understand how pessimistic the individual investor is can be found in the chart below that shows you that they are as underweight on equities as they were when Ben Bernanke was running the show and trying to save the world’s largest banks from crumbling.
That alone isn’t enough to make me double down or use leverage or a line of credit and just go big and heavy because I don’t think the economy is in such a bad slump that the recovery can be fierce and hugely profitable.
The economy is under attack from central banks that are making life horrible for those that abused zero-percent interest rate policies, but we are not in a severe recession with bankruptcies and dismal earnings.
In fact, like many, I think we’ll see the real slowing down in the months ahead, and fund managers are in agreement:
As weird and perverse as it sounds, you want to see charts like this if your goal is to deploy capital because it means expectations are extremely low. Therefore, the sellers have all left the room.
The chart below is even more unique since it shows that if you were in a room of money managers saying brighter days are ahead, you’d stick out like a sore thumb.
Here are a few things to keep in mind before looking at the chart below:
- The market is CHEAPER, but not truly a bargain like at the end of other major crashes
You can almost say that what happened thus far was mean reversion that occurred extremely fast.
- Not all market crashes must resemble 2008!
Don’t be the one out there looking at 2022 and saying that it looks like a battlefield but that you’ve seen worse ones with more casualties so it can’t be the end.
- Keep in mind that many on this fund manager survey joined Wall Street around 2008, so they have only lived through a bull market.
The reason that I personally think we have much more to go through is that the world’s governments are not all on the same page whatsoever.
In 2009, all governments were printing currency, propping-up markets, and looking for ways to get back on the horse.
Today, there’s far less unity. Countries are at odds with each other and the FED isn’t looked at as a central bank that’s being a sugar daddy but as a stringent grandfather who doesn’t want to spend anything and wants his grandchildren to learn the tough lessons on their own.
The bottom line is that nothing suggests a boom just because we’re in a bust.
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