Originally Posted by DrRoy
I have seen other reports of bearishness reaching levels of 2009. Generally that does bode well for equities. I do not market time based on this or anything else, but it does give one a bit more hope for better times in the market.
I'd like to see how well measures of "bearishness" correlate with future stock returns when also coupled with a market as richly valued as this one. My guess is we're forecasting off of some pretty spurious correlations in that bearish sentiment is usually highest when stocks have gotten the crap beaten out of them for a long time. That's certainly not the case today.
My wager is that valuations dominate sentiment as far as future returns are concerned. And most domestic equities don't look particularly cheap.
That doesn't mean they can't get more expensive, though.