Technical Talk: Individuals have below-average allocation to equities

Tuesday, November 17th, 2009

The comments below were provided by Peter Green of Fusion IQ.

The chart below shows the deviation in stock holdings by individual investors above or below their 22-year mean allocation of 60% to stocks. The chart is constructed with data from the American Association of Individual Investors (AAII) Asset Allocation Survey, which routinely surveys its user base to determine their current mix of stocks, bonds and cash. When investors are too far above or too far below this mean, it suggests either a depletion of investible cash or a large build-up in investible cash levels. When investors deplete their investible cash levels, stocks tend to top as there is no buying power left. Conversely, when investors build up large cash levels, stocks tend to bottom and rally as plenty of buying power exists.

Even with the current rally investors are still a few percentage points below their 22-year mean of 60%. While investors’ commitment levels to stocks remain this low (i.e. below the 22-year mean), it is hard to expect a major sell-off of any significance.

Additionally, the most recent AAII Bull/Bear Sentiment Survey only recorded 38.62% of its respondents as being bullish. With bullish sentiment, both measured and anecdotal, remaining cautious and skeptical, the sentiment backdrop continues to support higher prices for equities.

Source: Peter Green, Fusion IQ, November 16, 2009.

Tags: Aaii, Advertisement, American Association Of Individual Investors, Asset Allocation, Backdrop, Bull Bear, Bullish Sentiment, Current, Fusion, Iq, Iq Chart, Percentage Points, Rally, Respondents, Stock Holdings, Stocks Bonds, Survey
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What do you think? Bull or Bear Rally? Inflation or Deflation?

Thursday, October 22nd, 2009

Please participate in this AdvisorAnalyst Poll -
Are we in the midst of a bull market rally or bear market rally?
What do you believe is Canada’s immediate economic risk?

When the Poll is complete it will remain published on the right hand side of sites pages.

Poll

• Are we in a “Bull Market Rally” or a “Bear Market” Rally?

  • Bear Market Rally (66.0%, 258 Votes)
  • Bull Market Rally (34.0%, 133 Votes)

  Total Voters: 391

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• What is the immediate economic risk in Canada?

  • Deflation (65.0%, 219 Votes)
  • Inflation (35.0%, 119 Votes)

  Total Voters: 338

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• Polls Archive

Tags: Bear Market, Bull Bear, Canada, Economic Risk, inflation, Market Rally, Midst, Poll
Posted in Markets | 4 Comments »

Face to Face with Hugh Hendry

Thursday, July 9th, 2009

Hugh Hendry, founder of Eclectica Asset Management, shares his views on a number of topical issues with the Financial Times’s Gillian Tett in a three-part interview. He is not only outspoken, but also a top-notch investment manager - just the right ingredients for compelling viewing material.

Part 1: Bond bull, equity bear
Hendry explains why he remains bullish on bonds and worried about deflation.

Click here or on the image below to view the video clip.

Part 2: Fed hasn’t done enough
Hendry explains why record issuances will still see bond yields fall, and how politics is tying the Fed’s hands.

Click here to view part 2 of the interview.

Part 3: Bearish on China and gold
Henry argues that China is too dependent on US consumption for real recovery.

Click here to view part 3 of the interview.

Source: Financial Times, July 5, 2009.

Tags: Asset Management, Bond Yields, Bonds, Bull Bear, China, Consumption, Face To Face, Financial Times, Gillian Tett, Gold, Hasn, Hugh Hendry, Image View, Interview Source, Investment Manager, Source Financial, Top Notch, Topical Issues, Video Clip
Posted in Gold, Markets | No Comments »

Poll results: Stock market – buy, hold or sell?

Monday, June 29th, 2009

I posted an opinion poll about the outlook for the US stock market on Tuesday last week. In essence, the poll set out to determine readers’ views about the direction of the stock market over the next few months. More specifically the poll asked about the level of the S&P 500 Index (893 at the time of the poll) by the end of September 2009 and December 2009 respectively.

A total of 615 people participated in the September poll and 511 in the December poll, answering as shown in the tables below.

The S&P 500 improved on the first three days of the poll, but declined marginally on the last day, leaving the Index 2.9% higher over the voting period.

The poll results indicate quite negative investor sentiment. As far as the three-month period to September 30 is concerned, 71.9% of the readers see the S&P 500 declining, while a majority (55.1%) also see the Index down by the end of the year.

If serving only one purpose, and admittedly based on a relatively small sample, the voting indicates that there is not universal bullishness as is often cited by pundits as an argument in support of equities having experienced nothing more than a bear market rally since the March lows.

Interestingly, the bearish poll results are confirmed by last week’s survey by the American Association of Individual Investors (AAII), indicating 48% of investors were bearish while 28% were bullish. As reported by Bespoke, the bull-bear spread of -20.8% was the lowest level since the week ended March 12.

Source: Bespoke, June 25, 2009.

Tags: 511, American Association Of Individual Investors, Amp, Bear Market, Bull Bear, Buy Sell, Cape Town, Direction, Essence, Investor Sentiment, Lows, Market Rally, Opinion Poll, Outlook, Poll Results, Postcards, Pundits, Target, Us Stock Market, Week Ended March
Posted in Markets | No Comments »