I'd normally think that exceptionally low investor confidence means that it could be time to buy. After all, you want to buy when others are selling. Low confidence improves the odds that higher confidence levels will arrive in the future. But this time, the low confidence level comes with HIGH stock prices. That suggests that the low confidence may be warranted.
And it REALLY suggests that something weird is at work. If investors are not buying, WHO IS??? Something, obviously, is shoring up the stocks.
Investor Confidence Trails Consumers by Most Since 1995
By Julia Leite and Whitney Kisling - Jul 23, 20
12 11:26 AM ET
Bloomberg.com
U.S. consumer confidence and equity valuations are diverging the most in 17 years as the economy and profit growth leave stock prices behind.
The Standard & Poor’s 500 Index has traded at an average price-earnings multiple of 13.9 this year, 0.18 times the mean level of the Thomson Reuters/University of Michigan final index of consumer sentiment, according to data compiled by Bloomberg. The gap is the widest since 1995, when the S&P 500 gained 34 percent for its biggest annual rally of the last five decades.
Bears say the discounted valuations are still too high and anticipate the slowing U.S. recovery will lead to a repeat of last year, when equities lost 19 percent in five months. Bulls say price-earnings ratios as low as during the financial crisis make no sense with housing and industrial production expanding and the U.S. Federal Reserve standing ready to act should employment worsen.
More: http://www.bloomberg.com/news/2012-07-23/investor-confidence-trails-consumers-most-since-95-as-p-es-fall.html
Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months
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