US Advisors' Sentiment Report - Signals when you need them – near important market tops and bottoms
"In 23 years in this business, I have found your service (after acquiring the skill to read it) the single best indicator in the world." A.G. (Subscriber)
The Advisors’ Sentiment Report… heralding major market moves since 1963
This survey has been widely adopted by the investment community as a contrarian indicator and is followed closely by the financial media. Since its inception in 1963, our indicator has a consistent record for predicting the major market turning points.
Surveying a broad assembly of respected views
We study over a hundred independent market newsletters and assess each author’s current stance on the market: bullish, bearish or correction. Since we have had just four editors since inception, there has been a consistent approach to determining each advisors stance and his prior viewpoint.
Four decades of data to set our precedent
Our weekly sentiment data runs consistently back to the 1960’s. Current readings are put into context against historic precedents.
When the survey was developed by our founder, AW Cohen, he originally expected that the best time to be long the market was when most advisors were bullish. This proved to be far from the case – a majority of advisors and commentators were almost always wrong at market turning points. Quite simply, professional advisors are just as susceptible to market emotions as individual investors – they become far too greedy at the top of trends and far too fearful near the bottom.
A contrary indicator…but only at extremes
We don’t necessarily take a contrarian view to the newsletter writers in our survey. A large part of the time our sentiment readings remain neutral. We consider the norm to be 45% bulls, 35% bears and 20% neutral. However, we do pay attention to extreme readings in both bulls and bears and also to historically significant runs of more bulls than bears. To summarize, advisors are only wrong when you get too many of them start thinking the same thing.
Example, back in October 2002, there were many more bearish than bullish advisors – historically this has always been a good time to start thinking about buying the market.
Here's what Alan Abelson, writing in Barrons in early 2011 has to say about it:
"................while it helps, we suppose, to be able to tell the difference between a balance sheet and an income statement and know what P/E stands for, nothing in the investment armamentarium beats an educated grasp of crowd psychology. Granted, getting a handle on investor sentiment is not an automatic guarantee of making a killing on the Street. It's a contrarian indicator that has been around for a spell, and like a lot of venerable technical tools is a bit the worse for the wear. It's grounded in the logical assumption that when everyone's bullish, it implies that a lot of buying power has already been used up and, of course, when everyone's bearish, the opposite holds. If not infallible (what is, as we've noted before, besides the pope and financial journalists?), it provides investors with a highly reliable litmus test when the market reaches extremes of optimism or pessimism. And, right now, bullishness is dangerously rampant.For confirmation, just take a gander at that simple chart that enlivens this grim page, the handiwork of Investors Intelligence, which weekly tracks the view of those earnest souls, investment advisors, who tell you when, and often what, to buy and sell. It depicts the difference between the number of advisors who are upbeat and who are downbeat. That awesome spread in favor of the bulls works out to 41.6%, the most lopsided since the October 2007 all-time market peak, when the comparable gap was 42.4% and set the stage for the beginnings and forgive us for stirring painful memories of the worst equity disasters of the past half century."
Historic Advisors Sentiment Data - available for a separate fee of $995
Advisors Sentiment subscribers can view the charts of this indicator going back ten years. Our analysts also highlight re-occurance of various historic levels as and when they occur.
For hedge funds, "black-box" traders and quants we also offer the entire historical data set, from its start in 1963, for back-testing and modeling for proprietary systems. The data avaialble for a separate fee from the website subscription. It is available for purchase for US$995. The data is emailed in Excel format upon payment by Visa/Mastercard/AMEX credit card, or receipt of a check or money order. Credit card payments greatly speeds the transaction, and be sure they are payable in US funds. You can contact Grace Ann Iommazzo in our US office on 914-632-0422 or by email on firstname.lastname@example.org.
Please note: The Advisors Sentiment Report is also available as part of our US Market Timing Service.