A Reliable Contrarian Indicator

Source: Bank of America, Merrill Lynch

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  1. Iamthe50percent commented on Jul 2

    Look interesting but I don’t trust the sources.

    • Rich in NJ commented on Jul 2

      It’s one metric, but their research team is first-rate.

  2. dkelland commented on Jul 2

    So the data only goes back to 1985. Since we’re looking at the end of a secular bear market, wouldn’t the data from the late 70s and early 80s be useful?

  3. b_thunder commented on Jul 2

    Everybody is bearish but mutual funds’ equity allocation is near all time high, and cash near all time low.
    1. Pay attention to what they do, not what they say.
    2. When the trend turns (and despite what Draghi and Yellen keep promising, it will turn) people will channel this extreme fearfulness into an avalanche of sales, which, coupled with MoMo algos and HFTs may very well cause 1987-like event.

  4. bear_in_mind commented on Jul 3

    Well, that might have helped caution folks from buying boatloads of Webvan in late-1999, but I think I’d have to get a much better look under-the-hood of this chart before I used it to influence investment planning.

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