What do you think?
• Are you bullish, bearish, or neutral about the U.S. stock market?
• Are U.S. stocks undervalued, overvalued, or fairly valued?
• What is the biggest threat the U.S. stock market faces this year?
During the first four months of 2018, U.S stocks have experienced not one, but two, 10 percent declines. These short-term reversals are known as corrections. They occur relatively often, helping to wring out investor exuberance and, sometimes, to create buying opportunities as share prices drop.
The current twinset of corrections appears to have created a fair amount of uncertainty, according to Barron’s bi-annual Big Money Poll of professional investors. The ranks of the bullish have diminished, and the bearish remain relatively unchanged, but the number of those who are ‘neutral’ has swelled:
Fall 2017 Spring 2018
Bullish 61 percent 55 percent
Bearish 12 percent 11 percent
Neutral 27 percent 34 percent
Professional investors say their clients are also unsure about stock markets. They indicated 60 percent of clients were neutral about stocks, while 23 percent were bullish and 17 percent were bearish. When asked about market valuations, a majority thought U.S. stocks were fairly valued (57 percent) after the corrections. Thirty-five percent believe stocks remain overvalued, and 8 percent believe stocks have become undervalued.
If either ‘political/policy missteps’ or ‘rising interest rates’ was your answer to the biggest threat to U.S. stocks, then you’re thinking like a professional investor. Their list of worries included:
Political/policy missteps 35 percent
Rising interest rates 32 percent
Earnings disappointments 7 percent
Geopolitical crises 7 percent
Last week, the Dow Jones Industrial Average gained 1.8 percent, the Standard & Poor’s 500 Index was up 2.0 percent, and the NASDAQ Composite rose 2.8 percent.
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