Here are two very interesting sentiment based polls that show people are no where close to as optimistic as they were at previous major peaks.
First up, the Conference Board’s Consumer Confidence Index came in at 80.3 in July. Sure, this is up from the depths of the financial crisis, but what I find amazing is it is no where close to previous peaks going back 13 years. In 2000, this peaked at 145 and then in 2007 peak near 110. From a much bigger term perspective, I find this to be very bullish for stocks, as there is a lot of room for confidence to enter the picture. When everyone is bullish and happy, that is when you worry. We aren’t there yet.
The logical question is why is there such an amazing disconnect? I think it comes down to jobs, wages, and the economy haven’t come back as much as anyone would like. This is why people don’t ‘feel’ as good about things. Lastly, everyone remembers the last crash and in the back of their minds they are more naturally skeptical of things here.
Next up, the Yale School of Management has a poll they run that asks individuals and institutions how unlikely a stock market crash over the coming six months is. (Note – the lower the Index is, then the more worried over a crash people become, and vice versa on high readings)
Again, this is well off the lows we saw a few years ago, but no where close to the confidence we saw back in 2006 and 2007. In fact, from the individual point of view, there is as much worry over a crash currently as what we saw near the 2003 lows! That is simply amazing and hammers home just how skeptical the masses still are over this move to new highs.
Near-term anything can happen, sure. Yet, from a longer-term perspective I find things like above to be fascinating and potentially very bullish for equities going out longer-term. Once everyone is confident and no one is expecting a crash, that is when we probably crash. Fortunately, we aren’t anywhere close to that currently.