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Wall Street History
https://www.gofundme.com/s3h2w8
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03/17/2006
Another Sentiment Reading
[Wall Street History returns 3/31]
When the CNN/USA Today/Gallup poll came out the other day, I finally got around to doing something I’ve been meaning to for a while; that is, compare the public’s sentiment reading on the economy with actual stock market performance.
Pollsters gauged the percentage of Americans who rated the economy as “very good,” “somewhat good,” “somewhat poor,” or “very poor.”
The majority of the surveys were conducted over a weekend, for example March 10-12, 2006, so I then compared the percentage who rated the economy either ‘very good’ or ‘somewhat good’ with the latest closing average on the S&P 500 for the polling period.
So what you are looking at in the first line is Friday, March 10, 2006 59% rated the economy ‘good’ and the S&P 500 closed that day at 1281.
2006 3/10 ..59 1281 (S&P 500) 2005 9/9 ....53 1241 2005 4/29 ..50 1156 2004 12/17 53 1194 2004 1/30 ..52 1131 2003 12/5 ..57 1061 2003 10/10 44 1038 2003 3/14 ..35 .833 2003 2/26 ..34 .827 2002 12/10 44 .904 2002 10/22 41 .890 2002 9/20 ..54 .845 2002 7/26 ..51 .852 2002 6/28 ..58 .989 2002 4/5 61 1122 2002 1/12 ..57 1138 2001 12/14 50 1123 2001 9/21 ..57 .965 * (see below) 2001 4/20 ..67 1242 2001 2/9 80 1314 2001 1/16 ..82 1326 2000 6/7 85 1471 2000 3/10 ..86 1395 3/24, S&P peaked at 1527 1999 6/25 ..84 1315 1999 1/8 89 1275 1998 7/8 79 1166 1998 1/26 ..81 .956 1997 10/29 79 .919 1997 8/25 ..69 .920
[The data for the S&P 500 is gleaned from my own files.]
*The market last traded on Sept. 10, 2001, as the 9/11 attacks hit before the market could open that day. On 9/10, the S&P closed at 1092. The market reopened on 9/17 and finished the week, 9/21, at 965 as noted above.
This 965 figure proved to be a major low and the S&P 500 rallied up to 1172 on 1/4/02 .before beginning the final decline of the bear market that would take the average to 776 on 10/9/02.
What conclusions can you draw? I’m not so sure, but this whole little exercise can be viewed as just another contrarian indicator; similar to the bull / bear sentiment figures I list each week at the bottom of “Week in Review.”
And in looking at the numbers, recall that not only was the economy cooking in the late 90s, but Wall Street was outright euphoric. That’s certainly reflected in the data. Yet sentiment didn’t truly tank until well after the bear market was underway because, first, the recession we experienced was shallow and, second, it took a while for investors to face reality when it came to their statements and the damage suffered in the bear market. There’s always a lag effect, in other words.
Those are just a few of my back of the cocktail napkin thoughts and I’m sure you have your own.
I’ll begin updating this piece once a year or so.
I’m overseas next week. Wall Street History will return 3/31.
Brian Trumbore
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