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Bad is Good

Bad is Good

| August 30, 2021
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The University of Michigan reported a recent plunge in its Consumer Sentiment Index.  Contrary to what you might logically expect, this is actually a positive for the stock market.  Analyst Mark Hulbert notes that the American consumer is a fairly reliable contrarian stock market indicator, and calculated the data in the chart below.  More often than not, large declines in consumer confidence have been followed by above-average stock market returns.  As Warren Buffett says - it is wise for investors to be “fearful when others are greedy, and greedy when others are fearful.” (Chart from Mark Hulbert, marketwatch.com)

Jeffrey Cerny

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