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Another
Sentiment Reading
Brian
Trumbore
President/Editor, StocksandNews.com
When the CNN/USA Today/Gallup poll
came out the other day, I finally got around to doing
something I've been meaning to for a while; that is,
compare the public's sentiment reading on the economy
with actual stock market performance.
Pollsters
gauged the percentage of Americans who rated the economy
as "very good," "somewhat good," "somewhat poor,"
or "very poor."
The
majority of the surveys were conducted over a weekend,
for example March 10-12, 2006, so I then compared
the percentage who rated the economy either 'very
good' or 'somewhat good' with the latest closing average
on the S&P 500 for the polling period.
So
what you are looking at in the first line is Friday,
March 10, 2006?59% rated the economy 'good' and the
S&P 500 closed that day at 1281.
2006?3/10?..59?1281 (S&P 500)
2005?9/9?....53?1241
2005?4/29?..50?1156
2004?12/17?53?1194
2004?1/30?..52?1131
2003?12/5?..57?1061
2003?10/10?44?1038
2003?3/14?..35?.833
2003?2/26?..34?.827
2002?12/10?44?.904
2002?10/22?41?.890
2002?9/20?..54?.845
2002?7/26?..51?.852
2002?6/28?..58?.989
2002?4/5??61?1122
2002?1/12?..57?1138
2001?12/14?50?1123
2001?9/21?..57?.965?* (see below)
2001?4/20?..67?1242
2001?2/9??80?1314
2001?1/16?..82?1326
2000?6/7??85?1471
2000?3/10?..86?1395?3/24, S&P peaked at 1527
1999?6/25?..84?1315
1999?1/8??89?1275
1998?7/8??79?1166
1998?1/26?..81?.956
1997?10/29?79?.919
1997?8/25?..69?.920
[The
data for the S&P 500 is gleaned from my own files.]
*The
market last traded on Sept. 10, 2001, as the 9/11
attacks hit before the market could open that day.
On 9/10, the S&P closed at 1092. The market reopened
on 9/17 and finished the week, 9/21, at 965 as noted
above.
This
965 figure proved to be a major low and the S&P 500
rallied up to 1172 on 1/4/02?.before beginning the
final decline of the bear market that would take the
average to 776 on 10/9/02.
What
conclusions can you draw? I'm not so sure, but this
whole little exercise can be viewed as just another
contrarian indicator; similar to the bull / bear sentiment
figures I list each week at the bottom of "Week in
Review."
And
in looking at the numbers, recall that not only was
the economy cooking in the late 90s, but Wall Street
was outright euphoric. That's certainly reflected
in the data. Yet sentiment didn't truly tank until
well after the bear market was underway because, first,
the recession we experienced was shallow and, second,
it took a while for investors to face reality when
it came to their statements and the damage suffered
in the bear market. There's always a lag effect, in
other words.
Those
are just a few of my back of the cocktail napkin thoughts
and I'm sure you have your own.
I'll
begin updating this piece once a year or so.
I'm
overseas next week.
Brian
Trumbore
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