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Seth Golden posted an update 4 years, 4 months ago
Investors really hate this rally. Following last week’s AAII Bull-Bear reading (-29, the lowest since Feb ’16), it is important to look at how it has fared as a gauge for market trends. While its exuberance isn’t a great indicator for top, lows have consistently marked bottoms for the SPX. If many are already fearful and underweight, it tends to be difficult for stocks to fall far. As you probably recall, Feb of ’16 marked the bottom of a particularly frustrating period of investing, so we took a look at AAII Bull-Bear readings that hit this particularly poor level and tabulated the results. In general, it is overwhelmingly positive. Counting every incident, the 12M performance averages 14% and looking 2Y out, it’s still over 25%. If you remove 2008, the 12M and 24M returns average 21% and 31%, respectively, and returns have been positive every single time
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