Bulls, Bears and Market Sentiment
 
 

Advisors’ Sentiment: a contrarian approach to market timing

The Advisors Sentiment report surveys the market views of over 100 independent investment newsletters (those not affiliated with brokerage houses or mutual funds) and reports the findings as the percentage of advisors that are bullish, those bearish and those that expect a correction. The report has been widely adopted by the investment community as valuable anecdotal evidence as to extremes in investor confidence: conditions which are often seen at major market turning points. Since its inception in 1963, their indicator has a consistent record for predicting the major market turning points.


Surveying a broad assembly of respected views

The editors study over a hundred independent market newsletters and assess each author’s current stance on the market: bullish, bearish or correction. Since we have had just four editors since inception, there has been a consistent approach to determining each advisors stance and his prior viewpoint.

Signals when you need them – near important market tops and bottoms

When the survey was developed by their founder, AW Cohen, he originally expected that the best time to be long the market was when most advisors were bullish. This proved to be far from the case – a majority of advisors and commentators were almost always wrong at market turning points. Quite simply, professional advisors are just as susceptible to market emotions as individual investors – they become far too greedy at the top of trends and far too fearful near the bottom.

A contrary indicator…but only at extremes

US Advisors' Sentiment Report doesn’t necessarily take a contrarian view to the newsletter writers in our survey. A large part of the time our sentiment readings remain neutral. We consider the norm to be 45% bulls, 35% bears and 20% neutral. However, we do pay attention to extreme readings in both bulls and bears and also to historically significant runs of more bulls than bears. To summarize, advisors are only wrong when you get too many of them start thinking the same thing.

         

  Meet our Forbes Guru: Mike Burke

Market veteran Burke started his career in Wall Street in 1953 at the age of 17 in the Brokers Loan Department at Hanover Bank. This period was to spark a lifelong fascination with the stock markets; subsequently Burke took a major in finance at CCNY Baruch School in New York, studying under the fabled Leon Levy. During this period Burke met Robert Smith, one of the original founders of point and figure chart pioneers Chartcraft who introduced him to this technique of technical analysis.

After serving in the military at home and overseas, Burke joined Chartcraft in 1963, working for founder AW Cohen, the founder and the creator of the Advisors Sentiment Survey. Cohen and Burke continued to track the market over the often forgotten 1965-82 range bound era until in 1982 Cohen became incapacitated and Burke became Editor of Chartcraft publications. Burke has edited Chartcraft and Investors Intelligence ever since. Colleague John Gray has co-edited the publication since 2001.

In addition to his role as Editor, Burke has taught fundamental and technical analysis at the New School, New York from 1978-1990 and has been a columnist and contributing editor of the Moneypaper since 1985 providing a column and model portfolio in each issue. A frequent contributor to market commentary on TV and radio, Mike is regularly profiled in Forbes Magazine and his views sought major fund management groups, traders and financial media players. He has appeared in seminars throughout the US.

 
 



 
 

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