Study: consumers have finally become bearish on stocks. This is a bullish sign

I could be ignorant on these things, but isn't this one of those things that is generally backward, not forward looking? like, consumers are bearish BECAUSE the market went down? Not that we can necessarily expect the market to go down (more) because consumers are bearish?
 
Saltynuts said:
I could be ignorant on these things, but isn't this one of those things that is generally backward, not forward looking? like, consumers are bearish BECAUSE the market went down? Not that we can necessarily expect the market to go down (more) because consumers are bearish?
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You kind of defined sentiment with the above statement.
 
My main point was that consumers opinion on where prices are likely headed is obviously a function of what has happened in the recent past. Most people are subject to recency bias and if they see stocks whipping around up/down a few percent every day for a few months then they will obviously form bearish opinions...

Hence, all of the focus on investor sentiment over the years. Some people use it (no opinion on the value really), mostly because they figure if too many people are leaning in the same direction then it will typically move the other way.

Not sure if I explained any of this very well. Thinking is a bit cloudy right now.
 
The casual investors are always late. The guys who invest based on what they read in the Sunday business column sometimes pick some good high profile stocks but generally they take far too long to get heavy on stocks/cash. Going back to the 60's, Coppock concluded that it took the average person 11 to 14 months to recover from a negative shock, so maybe the average investor isn't going to be bullish on the Dow again until next year.....
 
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