We’ll be putting out a list this week of our major investment themes for 2023 and beyond. Theme #1 is the abnormal, low, weak level of investor sentiment as we enter the new year. 2022 was the first time in the proud 35y history of the AAII investor sentiment survey (institutional investor survey) in which an above average (bullish) reading was NEVER registered. This is a weekly survey. 0 for 52 is an impressive level of negative investor sentiment and one that cannot be ignored.
Why is this good? History says extreme negative sentiment readings of any and all shapes (put/call ratio, bull/Bear ratio, AAII survey data, BofA fund manager surveys etc. etc.) are accompanied by above average forward market returns. I did many client meetings in December and one consistent theme that emerged when talking with clients is that they are nervous and negative about markets. My answer to them is that they are not alone – everyone is nervous and negative. Everyone – retail investors and institutional investors alike. But new bull markets need to climb a wall of worry and the foundation of that wall of worry is very extreme negative sentiment. Friends, with regards to negative sentiment we are already there.
Chief Investment Officer
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