Investors Haven't Been This Optimistic Since The Peak Of The Dotcom Bubble

Tyler Durden's picture

So much for buy low, sell high.

As US stock benchmarks smashed through one record high after the next this year, bank CEOs and celebrated fund managers have responded to their performance with trepidation. Valuations are out of whack, they’ve said, and the market is running out of excuses to keep the party going. Whether the Trump administration can get tax reform passed by year’s end remains to be seen. And the Federal Reserve has said it will soon begin unwinding its massive balance sheet. Meanwhile, the European Central Bank is rapidly running out of bonds to buy.

In the US, investors have been yanking money from the biggest market-tracking ETFs while global central banks have purchased trillions in dollars of assets. Undergirding all of this is the fact that gains are increasingly driven by a small concentration of mega-cap stocks.

And while investors don’t appear to be too concerned with the situation in North Korea, the US, China and the UN Security Council are preparing to tighten the noose of international sanctions against both the country's economy and its government, something that will only make Kim Jong Un more desperate.

While the arguments for caution are almost too numerous to count, the precarious state of the market has been lost on the average investor, according to a survey from Wells Fargo and Gallup. The survey, which is used to calculate the Wells Fargo/Gallup Investor and Retirement Optimism Index, shows that investors haven’t been this optimistic about the stock market in 17 years – since September 2000, which was coincidentally the peak of the dot-com boom.

The index, after rising in every quarter since the start of 2016, leveled off in the second quarter at +124, before rising to its current +138 in the third quarter.

The latest boost in optimism pushed the index almost 100 points higher than the +40 score measured in February 2016. The 98-point hike over the past 18 months is the largest increase in the 20-year history of the index, excluding rebounds that have followed bouts of pessimism.

The survey was conducted between July 28 and Aug. 6, and includes US investors with $10,000 or more invested in stocks, bonds or mutual funds. The seven items that constitute the index include three on personal finances (meeting long-term investment goals, meeting short-term investment goals and maintaining income) and four on the economy (economic growth, the stock market, unemployment and inflation). As Gallup notes, the survey was being conducted as the Dow Jones Industrial Average surpassed the 22,000-point milestone for the first time.

Remember this guy?

We can extrapolate from this that investors, like gamblers, believe success begets more success, upside begets more upside. In short, thanks to of momentum, because the market is at a record high today, it will be at an even higher high tomorrow.

“Sixty-one percent of investors now say it is a good time to invest in the stock market, up from 53% two years ago. Among those saying it's a good time to invest, the main reason is their belief that the market will continue to increase, mentioned by 47%. Eighteen percent say stocks are a better investment than the alternatives, and 17% see stock market volatility as a buying opportunity.”

However, more than half of respondents who said they wouldn’t buy now did so for the same reason:

“Among the 37% who do not think it is a good time to put money into stocks, 52% say the main reason is worry about a market correction.”

Optimism among retirees has climbed more dramatically than their working peers. In the first-quarter survey, the index was similar among retirees (+124) and nonretirees (+127). Now retirees are considerably more optimistic than nonretirees, at +158 versus +130. This shift can largely be attributed to their views on the economy: while working Americans’ expectations for growth were steady, retirees’ expectations have climbed considerably.

In summary, two-thirds of investors are optimistic that the stock market will continue to climb, while a quarter are now very optimistic. While we wonder how large a shakeout would be needed to change their minds, at least we can put an end to the recurring soundbites that there is "money on the sidelines", that the market is "climbing a wall of worry" and that retail is oh so skeptical of stocks.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Erek's picture

Oh boy! Now's the chance to buy high and sell low!

How many will / have already fallen for that?

techpriest's picture

 
<--- Buy stocks, catch more CTRL + P
 
<--- Bail on stocks because CTRL + P cannot save you

GUS100CORRINA's picture

Investors Haven't Been This Optimistic Since The Peak Of The Dotcom Bubble

My response: Optimism comes from a firm belief that no matter what happens, the FED PUT will always be there to save the day.

Anyone take a look at volume statistics today? The volume statistics are dismal to say the least probably because the Central Banks are the only ones buying. This appears to be a GLOBAL move. 

Cash2Riches's picture

Another massive finacial crisis is coming in the near future. It is essentially guarenteed at this point, it is only a matter of "when" it comes crashing down on our heads. We must hold the elites accountable this time.

grasha87's picture

I have devised a free market currency/scrip to help alleviate recesions and unemployment that the Federal Reserve System has caused:

https://bunky1787.wordpress.com/2017/09/06/the-wallark-neo-scrip/

NoDebt's picture

"and 17% see stock market volatility as a buying opportunity."

What stock market volatility?  I'd pay real cash money for a solid 10% pull-back.

 

Kaiser Sousa's picture

another day of complete bullshit...

Seasmoke's picture

Flushing Gold right down the Tampa Bay today. Down $30 over 3 days.

Guess this is why they hyped Irma so ridiculously , needed to wash and repeat. North Korea was getting a bit old Gangem style.

buzzsaw99's picture

only (-$333) more to go before xmas bitchez.  ho ho ho!

Akdov Telmig's picture

OK, we all agree that we're in the last stage of a massive bubble about to burst but what could be the detonator for that burst short term?

For de DotCom bubble it was the startups debacle and for the housing bubble it was the subprimes and the CDS, but for this one which is still fully supported by the CB I don't see anyone obvious short term.

tion's picture

I think maybe one day in the wee hours while we are still asleep, the bond market makers come in to work and realize their hands are tied and they have nothing to pull out of their hats.

buzzsaw99's picture

i btfd so many times over the past 8 years it isn't even funny.  the only problem is i got out some time ago and there hasn't been a sizeable dip since.  it sucks.

chubbar's picture

There aren't any markets, just manipulations. This whole shebang depends on what the masters of the universe have planned, not fundamentals or previous peaks. If the FED jams a trillion into the markets surreptiously, they'll go a bunch higher. I mean, these fuckers have been lying to us from day one. How could anyone have any idea what is going to happen? It's all bullshit.

FreeShitter's picture

Draghi did say last week "QE forever" in obtuse language basically, so there you go.

buzzsaw99's picture

How could anyone have any idea what is going to happen?

on the contrary, only an idiot can't read the writing on the wall.

Golden Breakout's picture

Yes, it's all an illusion. But what you are describing is nothing more than currency debasement. And history shows that currency debasement NEVER brings a free lunch. Not long now.

grasha87's picture

I have devised a free market currency/scrip to help alleviate recesions and unemployment that the Federal Reserve System has caused:

https://bunky1787.wordpress.com/2017/09/06/the-wallark-neo-scrip/

Catahoula's picture

Time to sell some 

RealChairmanMeow's picture

Schiller pe ratio (cape) now higher than Black Tuesday, and second only to Pets.com peak in 1999. http://www.multpl.com/shiller-pe/

However, I got out of this market at 20k, so my dark vision for this economy is rapidly losing credibility with friends and family. 

Oh well... maybe the future is people buying snapchat stock with bitcoin, cuz i don't get it.

 

Blankfuck's picture

Pledge your allegence to the fed fucker ponzi of amerika for which it stands, one nation under ponzi for which it stands, under rule of the fed fuckers...........

ted41776's picture

last time i checked, the stock "market" was valued in $USD. so if it were to collapse, wouldn't the value of $USD have to go up? anyone seriously think that's a possibility? sometimes i just feel like i may be repeating myself, but what part of BTFD do you not understand? don't worry bruhs, yellen's got your back!

 

* The following comment does not make any guarantee or other promise as to any results that may be obtained from it's use. No one should make any investment decision without first consulting his or her own financial advisor and conducting his or her own research and due diligence. To the maximum extent permitted by law, I disclaim any and all liability in the event any information, commentary, analysis, opinions, advice and/or recommendations prove to be inaccurate, incomplete or unreliable, or result in any investment or other losses.

any_mouse's picture

Different things.

Priced in USD.

Valued by Unicorn farts.

any_mouse's picture

"Optimism among retirees"

"Delusional thinking among retirees"

"False hope among retirees that they won't have to eat dog food and sleep on a sidewalk."

SurlysonofaBitch's picture

Nine years of doom-porn at ZH and the S&P is hitting all times highes again.

ted41776's picture

unfortunately for us, digital currency, unlike the Weimar Mark, cannot be burned to heat your home

any_mouse's picture

Still true that the prices do not reflect a healthy market.

Unsustainable.

Take some profits.

Deep In Vocal Euphoria's picture

useful idiots..................

Grandad Grumps's picture

There are no investors.

FreeEarCandy's picture

In an upsidedown world, it was only a matter of time. Buy the peak!!!

JoeTurner's picture

This time really is different because the FED will never let stocks crash again...any serious downturn will be met with CTRL-P to the moon regardless of the hyperinflationary consequences 

Golden Breakout's picture

Not long now till this shitshow ends.

FreeShitter's picture

Not long now? Been heaing that since 09

Golden Breakout's picture

Which means I am 8 years closer than the guy who called it in 2009.

FreeShitter's picture

Whichs means nothing since you don't CTRL-P. When you do, let me know.

drugranker's picture

Easy to see why biotechs are shooting up, people are ready to pay $7K when they can get cheap and effective cancer meds for $600

https://www.rxrankings.com/datatable/default/chart/Yervoy#

KansasCrude's picture

Remember taking the kids to DC in the Summer of 2008.  Donation boxes at the Smithsonians were plexiglass so it was easy to see the donations,  Many were stuffed with $100,000,000,000 Zim buck notes from of course Zimbabwe.  We made a game of who could spot the biggest note.  We pondered the implications of notes that big stuffed into a donation box and learned they were basically Ass-wipe (AKA TP)  Oh BTW Zimbabwe had the best performing stock market in the world for that decade in nominal terms.....smells real familiar these days.

 

grasha87's picture

I have devised a free market currency/scrip to help alleviate recesions and unemployment that the Federal Reserve System has caused:

https://bunky1787.wordpress.com/2017/09/06/the-wallark-neo-scrip/

Akdov Telmig's picture

The price of the S&P 500 is too damn high!

 

I will short the Nasdaq 100 instead.

SweetDoug's picture

'

'

'

'

Hold!...

Hold!...

Hold!....

 

Buy the crash!

 

OJO

V-V

sbenard's picture

Bubbles, bubbles everywhere!