Stocks: Does sentiment indicators and debate throw up new signals and themes?

Abundance of conflicting sentiment opinion is circulating in today’s media on stock investments and the stock market appears very much delicately positioned.

This is not new to me at all when I think about the DOW’s journey. How is it that on the road to Dow 10,000, so many went wrong?

The lesson is do you have to move beyond bias to earn Alpha returns?

Diverse opinion signals that pop up in the media on a regular basis with incredibly intimidating financial jargons confuse the investors who are already unsure about navigating these markets.

The fundamental question remains to be answered is what is a poor retail investor to do? Given the current global and local economic situation a lot of noise continues to emerge from the Street and several themes seem to be playing out in tandem.

Latest stock market headline hit story is Stock investing as we know it will soon be dead: PIMCO’s GrossBill Gross, Jeremy Siegel spars as ‘death of equities’ debate rages onCHART OF THE DAY: Bill Gross’s Long History Of Being Wrong About The Stock Market- Jeremy Siegel Explains How Bill Gross Got His Latest Analysis Totally Wrong.

Let there be a debate on this subject.  We know from the pages of history how surprisingly on many occasions stock markets tend to do a U-turn when sentiment strays too far in one direction.

 I am not questioning why most often, stock market pundits and seers go wrong by extrapolating too much from the information they are using.

 I do agree that on many times Wall Street’s savviest veterans have also made mistakes. I respect their wisdom. In the past decades, The Economist, Fortune, Forbes, and Money all ran cover stories sounding the alarm. The end result seemed to be contradictory. I am also not certain to think whether am I right in asking to myself that you should be steering away from the fads and media hype.

 History has proved it right.  Mostly general sentiment proved as a contrary indicator. The most famous example was BUSINESS WEEK’s cover for August 13, 1979, on its story, “The Death of Equities.” What followed a few years later was one of the greatest bull markets in stock market history began in 1982. BUSINESS WEEK on May 9, 1983 ran an article, “The Rebirth of Equities.”On September 26, 1988 TIME declared, “Buy Stocks? No way!” and had a picture of an enormous bear. The DJIA was then at 2,000. Countless examples one can quote and keep on quoting.

 No doubt that in the recent past there has been some resistance to equity investments. The sentiment curve is moving upwards.

 I recall the old Wall Street saying that “The crowd is right in the middle and wrong in the ends.” That is, in the middle of a trend, don’t fight it. Follow the crowd.

 Never try to decorate your investment desk with sensational news clippings. Never one can plan the funeral procession for stock investments. Stocks are never dead. Stock investments are not one day journey. What we have to understand is that always investing in stocks requires hope. The stock market has shown in the past that it is capable of resilient to absolutes.

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