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Investor Sentiment Indicates Increased Stock Market Risk

We use investor sentiment as a contrarian indicator, and those indicators are signaling increased stock market risk. For instance, the Investor Intelligence Bulls/Bears poll of stock market newsletter writer sentiment shows bullish sentiment moved up to 57.2% from 54.2% a week ago, which calls for defensive measures. A number above 55% means elevated risk. Bearish sentiment at 17.1% also called for defensive action. Meanwhile, the spread between bullish and bearish sentiment expanded to +40.1%, from +37.4% last time. A number above 40% also calls for elevated risk and increased defensive measures.

Investor Sentiment Indicates Increased Stock Market Risk
Investor Sentiment Indicates Increased Stock Market Risk

Brad Lamensdorf

Brad Lamensdorf, the founder and portfolio manager of Active Alts, is a principal and co-manager of the AdvisorShares Ranger Equity Bear ETF. He previously managed a long-short investment partnership from 1998-2005 under the name Tarpon Capital Management. Earlier in his career Mr. Lamensdorf was an equity trader/market strategist for the Bass Brothers’ trading arm. He managed a short only portfolio in addition to co-managing a $1bil hedging program. He also served as in-house market strategist for the entire internal and external network of Bass Brothers money managers.

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