Alan Steel
01506 842365
MENU
  • Home
  • About Us
    • Close
    • About Us
    • What We Do
      • Close
      • What We Do
      • Our Services
      • Our Philosophy
      • Our Awards
      • Our Reputation
    • Who We Are
      • Close
      • Who We Are
      • Meet the team
    • Our Approach
    • Financial Planning
  • Testimonials
  • Investments
    • Close
    • Investments
    • Investment Advice
    • Portfolio Building
  • Pensions
    • Close
    • Pensions
    • Retirement Planning
    • Early Retirement
    • Pensions as simple as...
  • Tax
    • Close
    • Tax
    • Tax Advice
    • Tax Planning
    • When I'm Dead and Gone
    • Inheritance Tax
    • HMRC Digital Accounts
  • Insights & Media
    • Close
    • Insights & Media
    • Letters from Linlithgow
    • Informing You
    • Letter from America
    • See us in the Press
    • Master Investor
    • Points of Few
  • Contact Us
Independent financial advisers founded in 1975
Over £1.4 billion client funds under management
17 industry awards for advice since 1989

By Mike Williams, Managing Partner

The Good News? Investor Sentiment Still Stinks!

By Mike Williams | Friday, 12 June, 2020

The bears are awake again.

In time, I am afraid we are going to find that we were all over-looking the enemy sitting right in front of us: The media process we are all consuming today is driving the crowd nuts, causing bad moves, heightened tension, incredible fear, and then vast errors in judgment.

Hey, we all do it so don't feel bad. And he who does it wins less in the end, despite how it might look in the short-term.

All of the chatter of "Hey this is great, upside breakouts are coming in everywhere..." from recent days has turned into, "Stocks are tanking....the reckoning has come, virus breakouts in cities are overwhelming the system, how far does this sell-off go, the tide has turned, where can investors hide...and do we really need a vaccine before the market really can stabilize???"

For long-term investors that means we have to reset the broken record that tells us we must find a way to mentally and emotionally ignore this. 

The vicious and immediate shift from one extreme of the emotional scale to the other is a) not healthy (bad), b) not effective (bad), and c) terribly detrimental to your long-term results as an investor.

And if you’re a trader? Sorry, I can't offer you anything here. I’ve never been smart enough to be a trader - and don't know anyone who is - for the long haul.

How Do We Remain Confident?

Stay focused on the larger events. 

In all areas of the markets, sadly, dividend stocks are getting shellacked and still feeling the pain of "everyone will cut." They all won't, but until that cloud clears pressure is expected. They are (over the longer-term focus) making a solid effort to stabilize. 

Let's Review Some Pictures

I have shown charts of the major indices below - all with the trade ranges highlighted.

We had previously covered this - and then noted how quickly the breakouts occurred. And I had noted then that I had made a big error in assuming the trade ranges would last longer than they did.

Well, it sure looks to me like testing is now underway. And that is a positive my friends so let's stay focused and patient.  

Cash levels will be very valuable as we shake out weak hands after this run, and chop is your friend over the long run.

Here are the Dow Jones, NASDAQ, S&P 500, and NYSE Composite (below). And please note that as much as the high-flyers get all the attention, a vast majority of investors are seeing results driven by the NYSE -- unless Tech is being added as a balanced focus:





And Sentiment?

Well, the good news is that it still stinks, and we can be confident that if we get a week of ugly red ink the next reading in AAII will have a very good number for us.

There are still more bears than bulls in the latest: 

Sentiment coupled with demand for cash at all-time highs means you have a very nervous market.  

And very nervous markets see exaggerated selling.

Stay Focused on The Horizon

The summer haze is known for moving a few steps up and then a few steps back.  

That is nothing new.  

The news headlines tend to drive more short-term trading while volume falls as summer wears on. 

I suspect with more people at home taking in all the terrible news around the clock - it only exacerbates the issue at hand.  

Patient investors will use these windows to build for the long haul. 

Mike Williams, TruVestments

©2023 Alan Steel Asset Management Limited is authorised & regulated by The Financial Conduct Authority. Please note that the Financial Conduct Authority does not regulate some forms of tax advice. Company Registration: SC58014

You should remember that the value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

The investment services and/or investments referred to in this website may not be suitable for you. If you are unsure we suggest you contact us to discuss matters further. If we believe our services are not right for you we will tell you.

When investing money, whether for income or growth, you are placing your capital at risk as the value of investments may vary, so you could get back less than you started with.

The Financial Conduct Authority does not regulate Tax Advice, Trusts or wills. Alan Steel Asset Management Limited is authorised and regulated by the Financial Conduct Authority. The guidance contained in this website is subject to the regulatory regime of the UK.

The Financial Ombudsman Service (FOS) is an agency for arbitrating on unresolved complaints between regulated firms and their clients.

FOS details can be found at www.financial-ombudsman.org.uk

Alan Steel Asset Management Limited are not responsible for the content of external sites.

  • Cookie Policy
  • Privacy Policy
  • Website terms and conditions
  • Tax Services Privacy Notice
  • Contact Us

This site uses cookies. By using this site you agree to the use of cookies. Read our Cookie Policy