I'm going to let you in on a few little secrets about investor sentiment polls:
- They're only consequential at extreme readings.
- They're useless in the absence of other data.
- They often conflict with other sentiment polls taken at the same exact time.
But by far the most important thing you need to understand when presented with sentiment studies is that people tend to answer these things in alignment with who they want to be rather than who they really are.
In polls, as in real life, the profligate spender wants to convince himself and others that he is miserly, the most reckless wish to outwardly convey a sense of prudence, and so on.
With that in mind, two articles that came out last week purport to give us a read on what the individual investor is up to at this juncture. They are highly contradictory, a textbook case of the investor class saying one thing and then doing another.
The first story, in Financial Advisor Magazine, concerns a recent survey from MFS Investment Management...
"In a recent survey of 613 people with at least $100,000 in investable assets, 89 percent said they were very concerned about another serious drop in the stock market and 54 percent said they will never feel comfortable investing in the stock market again."