Re: The Wall Of Worry/ Skeptical of AAII Surveys newSubmitted by 2nd_ave (4921 comments) on Sat, 11/06/2010 - 13:56 #73660 (in reply to #73646)
dave- The problem I have with the AAII survey (and similar measures of 'sentiment') is that it's become overused as a trading strategy to the point where it may be possible to fade the numbers.
(a) If most traders expect the market to drop based on high bullish readings, then the indexes are less likely to do so- and in fact, may keep climibing.
(b) How current are the readings? If we're talking about survey results obtained in late October, are they still relevant, given the potential for interim changes of mind? (We all know sentiment can reverse on a dime even intraday.)
(c) How accurate are the readings? Do these surveys allow participants any flexibility in their responses? Are they able to hedge their takes? 'Well, I'm pretty bullish overall, but I'm concerned that QE2/mid-term elections may cause the market to sell off 3-4% in November- however, I'd be buying into that. On the other hand, if QE2 comes in as planned at 1t and the market rallies, I might take some off the table- I'd lock in some decent ST profits and look for some consolidation. I'll just have to wait and see. But if you're asking me to click on 'Bullish' or 'Bearish,' then I'll have to go with 'Bullish.'' That kind of take would still qualify as 'wall of worry' to me.
There are so many ways to bluff other traders that I'd be skeptical of using the AAII survey as an indication of a top.
Seems like everyone's bullish to me but it might be justified.
ReplyDeleteSeems like everyone's bullish to me too but it might NOT be justified. Even my subscription service is bullish and has been since SEP. I now hear Rosenberg when he said yesterday that the stock market is "running on fumes".
ReplyDeleteTodays Illinois-Michigan game was astounding. Triple OT. Extreme high score. Wolverines win. I did not even know what the rules were for OT.
ReplyDeleteIts like playing Monopoly and someone prints up extra money, and the rules are changed to where you get another $70,000,000,000,000 each everyone gets past Go!
ReplyDeleteAll the prices get bid up, because there is so much more money everywhere, but the properties are still the same...
From WSJ: impact of new congress on bonds is expected to be negative.
ReplyDelete"If taxes are cut and deficits soar, the federal government will have to issue many more bonds. That alone should depress prices. At some point it may start to undermine confidence in federal finances. And then there's the risk that political gridlock may degenerate into something worse -- political paralysis. That would hardly help confidence either. The outlook might be OK if bonds were already cheap. Instead they're expensive."
So it looks like my recent purchase of TBT was right on the money. :)
What are you guys sensing after reading the mainstream news this weekend? What is the investment community expecting in the short term and in the medium term?
ReplyDeleteWell guys, so you don't think our current situation doesn't have any correlation to running massive trade deficits continuously for over two decades and Asian currency pegs (probably advised by the likes of GS) had no hand in enabling any of that?
ReplyDeleteI think Ben's got the right idea, assuming he knows how to reel it in if things get out of hand. Seems to me it's working and he hasn't done anything but flap his jaws.
And as far as market prices not being justified, I suppose higher gold prices aren't justified either even though gold pays no dividend and gold creates no wealth or value?
Commodities prices - And I hope someone doesn't try to claim Ben's QE program has singularly pushed commodities prices higher, as if natural resources are infinite and Asia has no growth...
ReplyDeleteIf that's what you think, then hold onto your hats!
Amazing how these jr gold miners couldn't afford to gas up their Rolls-Royces just a year ago and now they're rolling in the dough!
ReplyDeleteMaybe they should send Ben a thank you note or something...
Ben is forcing the rest of the world to either rebalance (ie spend or invest the dollars) which if spent on american goods will put americans to work, OR watch the bonds they own become worthless as re runs the presses full out till the dollar is devalued to where nobody eles is willing to devalue their currencies to gain exports.
ReplyDeleteTimmy is a liar and con man. They are playing good cop, bad cop between them.
They have no choice but to print if they wont do something like import certificates or voluntary controls (which were shot down by G20 recently).
End result, Ben is going to print, Timmy lied, and buy gold/miners on dips because dollar will be made worthless.