I’ve included the Yale Crash Confidence indicator below.

It’s published monthly and shows us the proportion of investors who believe we will avoid a stock-market crash in the next six months.

Those NOT fearing a crash are at record lows, which means we have more people now who are afraid of a stock market crash than even AFTER the Great Recession’s price action ending in March 2009.

That was about 20,000 Dow Jones points ago.

Oh, and by the way, each of those other low points in the data above, both for Individual and Institutional investors, turned out to be extremely valuable points for long-term investors remaining patient and focused on the horizon ahead.

Remember, chop, corrective action, and waves of fear create the spring-loading effect that drives your future returns.  

Pray for more of it.

A Record Falls!

The latest AAII data shows that there are slightly more bulls than bears.  

That’s the first time in about 35 weeks.

Yet even as 65% of the audience remains NOT Bullish, this record-setting run has a positive historical backdrop to it.

If you have a look at the charts below, you’ll see that there has only been one period where the results were lower a year later.

That was during the aforementioned 2008-2009 Great Financial Recession.  

My point is that you shouldn’t be at all surprised to see a 20% + gain in 2021 as earnings and the reshaping of American business takes a stronger hold:

That spring-loading effect mentioned earlier gets underlined by the data above.

Check the top of the list where 1/4/1991 shows the end of the last big peak.  

One year later there were gains of 30+% despite being in the middle of a recessionary fog that later dissipated when few were expecting it.

High Level Review

We know the bad stuff.

We get told all about it 24/7.

That’s the coal face view. 

The horizon ahead is much brighter. You just have to look over the nonsense that’s being put in your way by the media each day and you’ll see the good stuff, like:

• ISM is solid
• Manufacturing is solid 
• Supply chains are coming back to the US 
• Business openings are exploding 
• As is small business optimism and their associated forward-looking hiring plans 
• Auto production has fully recovered 
• Tech is washing over every sector of the market 
• Earnings and margins are set to shock people a year or so down the road 
• And massive cash levels will serve as future fuel at higher prices.

Folks, Generation Y is just beginning to buy homes. And there’s a 20-year of that still to go for this cohort. Look for increasing family formations and marriages as the next stage.

And remember that it’s our job to withstand the assured storms ahead and be disciplined in our planning.

The media will do its best to knock you off your focus, grab at your fears, and take you off your pathway. 

And the volume will be exponentially higher before, during and after the election.

Look above, beyond and beneath the near-term noise that’s trying to steal your strategy and perspective.

Exciting things are dead ahead.