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Jan 04

2023 Theme #1: Abnormal, very weak investor sentiment to start the year

  • January 4, 2023
  • CWM Investment Team
  • Richard Barrett

We’ll be putting out a list this week of our major investment themes for 2023 and beyond. Theme #1 is the abnormal, low, weak level of investor sentiment as we enter the new year. 2022 was the first time in the proud 35y history of the AAII investor sentiment survey (institutional investor survey) in which an above average (bullish) reading was NEVER registered. This is a weekly survey. 0 for 52 is an impressive level of negative investor sentiment and one that cannot be ignored.

Why is this good? History says extreme negative sentiment readings of any and all shapes (put/call ratio, bull/Bear ratio, AAII survey data, BofA fund manager surveys etc. etc.) are accompanied by above average forward market returns. I did many client meetings in December and one consistent theme that emerged when talking with clients is that they are nervous and negative about markets. My answer to them is that they are not alone – everyone is nervous and negative. Everyone – retail investors and institutional investors alike. But new bull markets need to climb a wall of worry and the foundation of that wall of worry is very extreme negative sentiment. Friends, with regards to negative sentiment we are already there.

Source: AAAII, Jones Trading LLC as of January 3, 2023

Richard Barrett
Chief Investment Officer


Congress Wealth Management LLC (“Congress”) is a registered investment advisor with the U.S. Securities and Exchange Commission (“SEC”). Registration does not imply a certain level of skill or training. For additional information, please visit our website at congresswealth.com or visit the Investment Adviser Public Disclosure website at www.adviserinfo.sec.gov by searching with Congress’ CRD #310873.

This note is provided for informational purposes only. Congress believes this information to be accurate and reliable but does not warrant it as to completeness or accuracy. This note may include candid statements, opinions and/or forecasts, including those regarding investment strategies and economic and market conditions; however, there is no guarantee that such statements, opinions and/or forecasts will prove to be correct. All such expressions of opinions or forecasts are subject to change without notice. Any projections, targets or estimates are forward looking statements and are based on Congress’ research, analysis, and assumption. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. This note is not a complete analysis of all material facts respecting any issuer, industry or security or of your investment objectives, parameters, needs or financial situation, and therefore is not a sufficient basis alone on which to base an investment decision. Clients should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed or recommended in this note. No portion of this note is to be construed as a solicitation to buy or sell a security or the provision of personalized investment, tax or legal advice. Investing entails the risk of loss of principal.

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Related Posts

  • The Recession of 2023February 2, 2023
  • We’re onto FebruaryFebruary 1, 2023
  • “Inflation is a monetary phenomenon” – Milton FriedmanJanuary 31, 2023
  • Sentiment & Positioning: both offsides, repeat first downJanuary 24, 2023

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    © Congress Wealth Advisor Solutions
    Congress Wealth Advisor Solutions (CWAS) is a division of Congress Wealth Management, LLC (CWM), which is a registered investment advisor with the U.S. Securities and Exchange Commission. For additional information, please visit the Investment Adviser Public Disclosure website by searching with CWM's CRD #310873. Investment Advisory services are offered and rendered through CWM. CWM acquired Pinnacle Advisory Group, Inc. (Pinnacle) on April 30, 2021.