Since its Friday, I wanted to keep things a little light and
do a little "head check" to see where everyone thinks we are in
the emotional cycle of the marketplace (and maybe where you might
think we are headed).
Psychology is a large part of investing; understanding how the
masses are "thinking" is essential to determining a thesis for a
stock. As we see time and time again it's often manias and panics
with little or no fundamental basis or even a complete disconnect
from fundamentals which have spawned some of the largest
volatility in stocks and other assets.
An example might be how an explosion in the Middle East might
trigger panic selling in an unrelated tech stock or back in the
1990's when anything with a dot-com at the end of its name was
bought regardless of their business health or growth.
Then there is the macro sentiment that many use to determine
just how the market reacts to news and data.
Today we are in a bit of a odd sentiment in my opinion.
Stocks have rallied 15% YTD and are up almost 30% since their
lows right around this time last year, yet earnings growth is
less than 3% and revenue growth is a negative 1%. In
addition to the fact there isn't any fantastically positive data
to justify gains; stocks seem to brush off most of the poor
economic data sets.
I think it's at least safe to say that market's are in a
"positive" state of mind (let me know if you disagree).
The point here is not to argue whether the market is fairly
priced, cheap or overbought; I'm just curious as to where you all
think we are in the cycle using the chart below (credit to its
original creator who I am unable to identify).
To put your opinion in perspective, let's use a one year time
frame or so, because this data can be extrapolated to trends
within a day's time or over a 20 year period.
Given the state of things, the data I am observing and the
opinions of investors that I encounter, I think are right
around the "Thrill" area of the curve, closely approaching
Where do you all see the market right
Explain your answers if you want, but if you just want
to spit out a level, that's fine as well!
SPDR-SP 500 TR (SPY): ETF Research Reports
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