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Home / Business / Fear does exist, but this is why investors might consider a ‘historic’ buying opportunity.

Fear does exist, but this is why investors might consider a ‘historic’ buying opportunity.



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If investors are worried about the election and the stock market, you certainly wouldn’t know it from the latest bull run, which saw Wall Street turn to its best weekly performance since May. Private.

Dow Jones Industrial Average DJIA,
-0.23%
up 6.9% over a five-day period, while the S&P 500 SPX,
-0.02%
an increase of 7.3%. Nasdaq Composite COMP is technology-heavy,
+ 0.03%
outperformed both other major benchmarks with a 9% gain.

Despite the dramatic rise, the mood is still quite bleak, according to the Robert Shiller’s US Crash Confidence Index. The numbers show that nearly 90% of investors believe that “a catastrophic stock market crash in America, like October 28, 1929 or October 19, 1987, could happen during in the next six months, including the case of an incident occurring in other countries and spreading to the US ”

Shiller, a Nobel Prize-winning economist and professor Yale, highlighted the results in a recent article for the New York Times. “The coronavirus crisis and the November elections pushed fears of a major market crash to years-high,” he wrote. “At the same time, the stock is trading at a very high level. That volatile combination does not mean that a problem will occur, but it does show that the risk of one incident is relatively high. This is the time to be careful ”.

While Shiller warned it was time to be cautious, JC Parets of All Star Charts blog said the opposite. He used this chart to determine his point of view:

Parets wrote in a blog post on Sunday: “Whenever we drop near these levels in the Falling Confidence Index, there are not only no crashes, but real calendar buying opportunities. used on the stock market. “I think today is no different.

In fact, Parets, taking the opposite approach, said that he was never more confident that investors were wrong about the end of the crash, so he was hoarding stock.

“For me, there is no holy grail. There’s no magic indicator that tells us when to buy and when to sell. It’s a weight-proof approach that we take here, ”he explained. “This is just proof that buying stocks is still a better idea than selling them.”


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