April 26 2016
U.S. stock markets finished last week in heady territory.
The Dow Jones Industrial Average closed at 18,003. Its all-time closing high is 18,312. The Standard & Poor’s 500 Index was less than 1 percent below its intraday trading record, which was set last year.
Despite strong stock market performance, optimism was in short supply.
Barron’s latest Big Money poll showed money managers are less bullish than they were last fall. Just 38 percent were bullish or very bullish about the prospects for stocks in coming months, 46 percent were neutral, and 16 percent were bearish. Their outlook varied by market. Overall, they were most enthusiastic about the United States, European, and emerging markets:
- U.S. stocks: 72 percent bullish / 28 percent bearish
- European stocks: 66 percent bullish / 34 percent bearish
- Emerging markets stocks: 53 percent bullish / 47 percent bearish
- Japanese stocks: 30 percent bullish / 70 percent bearish
- Chinese stocks: 29 percent bullish / 71 percent bearish
- The American Association of Individual Investors’ Sentiment Survey reported, when compared to money managers, investors are less neutral (43 percent) and more bearish (24 percent) about what may happen during the next six months.
Current levels of pessimism might have inspired Sir John Templeton, a renowned contrarian investor. He once said, “Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.”
- Data as of 4/22/161-WeekY-T-D1-Year3-Year5-Year10-Year
- Standard & Poor’s 500 (Domestic Stocks)0.0050.023-0.0080.1020.0940.048
- Dow Jones Global ex-U.S.11.7-11.8-0.3-1.8-0.5
- 10-year Treasury Note (Yield Only)1.9NA21.73.45
- Gold (per ounce)1.3174.5-4.4-3.77.2
- Bloomberg Commodity Index3.35.7-17.5-14.1-13.8-7.3
- DJ Equity All REIT Total Return Index-188.8.131.52.810.66.7
*Indices are unmanaged and investors cannot invest directly in an index.
*Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association
*S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.