Good news: Extreme pessimism seen with consumers

Consumers have never been more pessimistic (by Sentimentrader)

For stock investors, 2022 has been horrid. It's been even worse for bond holders, who got used to slow, steady gains. Bonds usually served to offset losses in stocks, but not this year. It's been brutal, and the losses have weighed on investors' moods. Now, with a steady drumbeat of news reports about plunging stocks, bonds, and crypto, investors' pessimism has spread to general U.S. households. In the U.S., households now hate stocks on a level rarely matched in 35 years. According to the Conference Board, the net percentage of consumers who expect stocks to rise versus fall is the lowest in over a decade. They hate bonds even more... If we combine stock and bond sentiment, it is now the lowest in history. Never before in 35 years have more consumers expected both stocks and bonds to decline. Every time when combined sentiment got nearly this low in the past, both stocks and bonds rebounded. All those 60/40 investors who got sucked in by steady gains over the past few decades are hoping history repeats.

What the research tells us

General U.S. consumer sentiment toward stocks is the worst in over a decade. It's also historically pessimistic toward the bond market Combined stock and bond sentiment is the worst in history. After other bouts of pessimism, both stocks and bonds showed positive total returns in the months ahead.