Nobody in recorded history has ever changed their behaviour because they filled in a form.
Last Thursday, 44.4% of American individual investors ticked a box saying they expect stocks to fall over the next six months.
Then they shut the laptop… and did absolutely nothing.
I know they did nothing because the same outfit asks a second question.
Not how-do-you-feel but "what do you actually own."
The same people who are bearish? Have record high stock allocations… averaging 70.4% of all assets.
(The long-run average is 61.5% by the way)
You see, every night Ivy informs me… with total conviction and unbroken eye contact, that she is not tired.
5 minutes and 2 pages of a story later, she’s asleep in my arms.
Because what we say and what we do are often very different.
Worrying about your portfolio is free, whereas selling stocks has real consequences…
And when investors really do sell… the supply leaves early. The damage gets done in advance, before the scary headlines arrive.
But what we have instead is a market where the mood is uncertain but in many stocks, the money isn’t moving…
Which could mean nothing, or it could be pent up selling pressure looking for a reason to exit.
Usually we get that with earnings… but the overwhelming majority of companies reported great results this past quarter.
But this week a new foe has entered the arena…
Rates.
Inflation expectations are all over the place, we’ve flip flopped from potential cuts to potential rises again.
Not just the US either, yields in places like Japan, France and the UK are going up too.
Because nobody is pricing what a country owes anymore… they're pricing whether said country can grow out of it. And the US is still growing faster than other major economies…
So as always, rates are far more important to what the market does rather than any potential “black swan” event…
That’s what will move the 70.4%, rather than a survey.
I’m not making any moves for now, but my go-to in a higher rate environment is generate extra income from my portfolio by using covered calls…
Oliver