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Home>UPDATE: Why rising optimism should make stock-market investors nervous

UPDATE: Why rising optimism should make stock-market investors nervous

UPDATE: Why rising optimism should make stock-market investors nervous

10/03/2017

By Anora M. Gaudiano, MarketWatch

Market participants have 'moved out of skepticism and are solidly in optimism': BofA Merill Lynch

Following Warren Buffett's stock-market investing formula of being fearful when others are greedy and greedy when others are fearful sounds easy enough. The problem, however, is that it can be hard to discern whether investors are greedy or fearful or somewhere in between.

Past surveys have indicated that investors often say they are fearful but still act as though they are very optimistic (http://www.marketwatch.com/story/exuberant-investors-are-behind-extreme-valuations-2017-05-01).

The current bull market, which entered its ninth year in March, has arguably been one of the most hated, and that longstanding skepticism has been credited as a force behind its longevity. The S&P 500 climbed even as investors remained skeptical about the economy, earnings and, more recently, lofty valuations. The index was in record territory Monday, up 0.3%, and has rallied 13% since the end of 2016.

See:Welcome to the second biggest bull market since World War II (http://www.marketwatch.com/story/welcome-to-the-second-strongest-bull-market-since-world-war-ii-2017-09-20)

Also:'Nonexistent' stock-market euphoria means start of long decline unlikely: Goldman (http://www.marketwatch.com/story/nonexistent-stock-market-euphoria-means-start-of-long-decline-unlikely-goldman-2017-09-11)

But as the main indexes continue to hit records, investor optimism has started to rise as well. So is some fearfulness justified?

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