But there is a possible bright side to the misery of millionaires – and I’m not talking schadenfreude. Maybe a bearish signal from millionaires could mark a market bottom.
If we take a look at the S&P alongside the millionaire investor index we see two things. First, there is a pretty good correlation between the mood of millionaires and the market. Millionaire optimism goes up when markets go up, and it goes down when markets go down.
The second lesson is that lows in millionaire sentiment are often followed by market rallies. The last time we saw maximum bear sentiment from the millionaires was October of 2011. Their pessimism was followed by the huge rally in the S&P, which continued into the early spring.
The previous fall was in the March of 2011, which also preceded a mini rally in the S&P.
Of course, the predictive effects of the millionaire sentiment don’t always work. Millionaires turned bearish in the spring of 2011, and the market continued to fall even further throughout the summer – along with their sentiment.
Still, the last time millionaires were bearish, the markets followed with a strong rally.
Do you think millionaires are a leading indicator, negative indicator or non-indicator for financial markets?
-By CNBC's Robert Frank
Follow Robert Frank on Twitter: @robtfrank