You all know the theory of contrary opinion applied to the bag. According to this, it is interpreted that when most investors are optimistic, they have already bought equities, so the market has to lose for lack of buyers. Similarly, if the mass of investors are pessimistic, you've probably sold their shares, then a large part of investors buy shares before or after and their prices rise by lack of sellers.
interesting thing is to know at all times when investors are optimistic or pessimistic. The American Association of Individual Investors publishes a survey of market sentiment is very soon. Carpathian even follow a fairly predictable long-term whereby has to buy stock when the average 8-week upward decrease in the level of 29 . You can follow the interview at this link .
Serve this as an introduction to another survey that found most interesting yet. The AAII Allocation Survey is a survey of the same association, but it shows the composition of portfolio investors. When these investors are cautious and increase the weighting of cash in their portfolios, while reducing the stock position is that it is time to buy equities.
As we see, when the equity percentage drops to about 40% and when the cash rate also goes up to around 40%, probably we are facing a market floor, and buying opportunity for long term . This has happened in the two major land market of the last decade.
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