Stocks have rallied more than 15% since Christmas Eve, but investors are still feeling bruised by the brutal near-20% correction late last year. According to the January 2019 Conference Board Survey, 38.6% of respondents expect stocks will decline in the coming year, compared to 30.9% who expect stocks to rise. To put it another way, bears were 7.7% more common than bulls in the most recent survey.
Such a negative spread between bears and bulls is a rare occurrence in Conference Board surveys. Dating back to 1987, respondents have only been similarly or more pessimistic on the prospects for stocks in 10 previous survey instances.
The table above plots the forward returns that followed these 10 previous instances of poor Conference Board investor sentiment. Looking at the subsequent 253 trading days (roughly equivalent to 1 calendar year) for all previous occurrences, the S&P generated positive returns in 9 out of 10 instances, for an average 1-year gain of 21.4%. The one exception was the July 2008 survey, which was conducted during the Great Financial Crisis and just two months prior to the failure of Lehman Brothers.
In our opinion, the January 2019 survey results demonstrate that investor expectations remain subdued, and that the 4th quarter pullback priced in a significant amount of bad news. To the extent that fundamental conditions and economic data play out more positively than investors have been expecting, stock prices could have room to readjust upward in 2019.
Why Secure Passwords Matter and How to Create Them
10 Ways to Celebrate International Women’s Day
Becoming a Great Podcast Host with Celeste Headlee
New Guiding Principles for Opportunity Zone Investors
Leaders: Do You Challenge Your Status Quo?
9 Marketing Trends That Will Dominate This Year
How To Keep Envy From Destroying Your Workplace
6 Tips to Help Your Journey to Retirement
Who Do You Sell to First
Business Owners Should Set 3 Types of Exit Goals
Forward-Looking Investing14 hours ago
Moat Investing: Powered by Morningstar
Market Strategist14 hours ago
We Are Not Convinced the Market Storm Has Completely Passed
Development14 hours ago
Advisors: How To Answer “What Do You Do?”
Markets1 day ago
Higher Mortgage Rates, Student Loans and Nike
Equities2 days ago
7 Stocks That Pay the Largest Dividends of All That Trade on Nasdaq – Or Do They?
Advisor2 days ago
The Wizards of Wall Street vs. The Selbees from Michigan
Markets3 days ago
The Chameleons Are on the Run
Compliance3 days ago
Regulators Focusing on How Firms Identify, Monitor and Test Custody Scenarios With Client Assets