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Do As I Say, Or Do As I Do?

I include this chart in most of my speeches on asset allocation as it shows just how wrong the crowd can be at EXTREMES.  People were most bullish in literally the worst month ever, and most bearish at the exact BOTTOM.

Why they are all so bearish now I have no idea.  It is in the bottom 3% of all readings, which historically means returns of 15% in the following year.  Readings below 20% bulls are on average 20% a year!

bulls

 

Now, on the flip side people are actually heavily allocated to equities.  (This is likely due to drift.) And this has historically been very bearish for stocks….

So, which is going to win out: Do what I say, or Do what I do?

 

bears

 

Picture1

 

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