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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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Wall Street History

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