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.”
Source: II
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.