Investors Are More Scared Today Than They Were in 2009

Doc’s note: Fear is the quickest way to ruin your investment success. And today, my friend and colleague Dr. Steve Sjuggerud is showing where he’s seeing more fear than he has in a decade…

And why you should capitalize on it.

This is not what we’d expect to see at the end of a major bull market.

We should see euphoria – investors throwing caution to the wind, taking big (and even foolish) risks.

That’s what happened as the dot-com bubble approached its peak. I saw friends getting “paper rich” with stock options. Others quit their jobs to day trade full time. It was madness.

The same thing happened with housing in the mid-2000s. It seemed like everyone I knew had gotten their real estate license. I knew plumbers and contractors who quit their jobs to flip houses.

This idea just isn’t playing out today. Investors haven’t thrown caution to the wind. They haven’t gone “all in.”

In fact, investors are downright scared…

You only have to ask the investment community to figure out that fear is rampant today.

That’s exactly what the American Association of Individual Investors (“AAII”) does each week. Using a simple survey, it asks a group of investors if they are bullish, bearish, or neutral on stocks over the next six months.

This late in a bull market, we’d expect investors to be excited. We’d expect them to be bullish. But as you can probably guess, that’s not the case.

But this month, we’ve seen investors be more bearish than they’ve been since 2009. It’s crazy – but it’s true!

According to a recent AAII Sentiment Survey, investors are more scared today than they were during the most recent stock market correction… the U.S. credit downgrade in 2011… and even the depths of the financial crisis.

That’s nuts for a simple reason. We’re not in a major crisis today… It’s quite the opposite.

After 10 years of higher stock prices, the S&P 500 remains near all-time highs. The economy continues to show signs of strength. And interest rates are incredibly low, which tends to be rocket fuel for stock prices.

Still, instead of going “all in” like we would expect, individual investors are scared. You can’t make this stuff up!

This is another reason why I’m so bullish on the broader market. Stocks are a better deal than most folks realize. And with bonds yielding next to nothing, investors should change course and buy equities in the search for yield.

Sure, there are plenty of reasons to worry. We’re in an environment where a presidential tweet can move markets 2% higher or lower. It’s new and unsettling, no doubt. But you have to ask yourself…

Do these fears matter, or are they just a passing phase?

To me, every doubt out there today is a short-term worry, not a long-term concern. And when you look at the big picture, there are plenty of reasons to be excited.

That’s why I believe you must own stocks today.

And this Wednesday night, we’ve partnered with a Boston professor you’ve probably seen on CNBC… or read his work in the Harvard Business Review, Barron’s, and Forbes. His name is Joel Litman.

On September 25, Joel is holding an online demonstration to “pull back the curtain” on his powerful system. He’ll walk through how it can help you uncover stocks that could soon double or triple your money… and much more.

This event is free to view, but you must sign up in advance. And you’ll even get the chance to try out this idea for yourself…

Learn more here.

Good investing,

Steve