As the market takes a pause from its recent string of new highs, the question investors are pondering is whether it will it resume its march higher, or perhaps turn negative. According to the American Association of Individual Investors, bearishness among regular folks has just climbed to its highest level in over a year and second-highest in four years. But before considering rotating into “safe haven” investments, investors might instead consider that analysts actually view this as a contrarian indicator. In other words, sophisticated professional investors actually are more optimistic the gloomier the regular folks get. According to financial blogger Jani Ziedins, “When the market isn’t doing what the crowd expects, that means it is getting ready to do the opposite.” While not ready to predict a move higher, Mr. Ziedins suggests that is “far more likely” than an imminent collapse.
| March 13, 2017