You may know the two main phases of the stock market cycle—the bull and the bear—but did you know investor sentiment can tell you where the market may go next? In this video series, Fisher Investments discusses the different phases the stock market goes through, and how investor sentiment evolves throughout those phases.
Investor sentiment refers to how the general public feels about stocks. In order to gauge how the public feels about stocks, we look at a variety of different factors, including economic stories in the media, professional market forecasts, as well as money flowing into or out of funds. We don’t believe that investor sentiment alone has the ability to bring a bull market to a halt. However, we do believe that it can be a good indicator of what stage the current market cycle is in.
One of the 20th century’s most prominent investors Sir John Templeton famously stated “Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.” This means that bull markets generally start when the investing public has given up hope that stocks will recover and that bull markets come to an end once investors’ expectations for stocks become unrealistically high.
We think it’s critical that investors understand what moves the market so they have a better idea of what they can expect. If you enjoy videos like this one, make sure to subscribe to our channel and ring the bell to be notified when new content is published.
