Contrarians Suggest Investor Pessimism as a Rally Sign
Contrarians Suggest Investor Pessimism as a Rally Sign
Americans continue to be wary of stocks. The S&P 500 stock index is almost unchanged from a year ago, and mutual fund investors have pulled $57 billion from equities since May. At the same time, when stocks appear as the better investment investors have put about $597 billion into bond funds, according to ICI. In fact, 68 stocks in the S&P 500 paid dividends that exceeded the average corporate bond rate. Confidence in bonds is misplaced, according to a manager at Pioneer Investments. Credit Suisse pointed out that free cash flow (outside of the financial industry) represented 6.8% of stock prices, which is the highest level since 1960. Some suggest that retail investors need to see tangible evidence that will generate sustained growth.