Markets Go Up, but Optimism Falls Short

April
25

Written by: Jon McGraw

U.S. stock markets finished last week in heady territory.

The Dow Jones Industrial Average closed at 18,003. Its all-time closing high is 18,312. The Standard & Poor’s 500 Index was less than 1 percent below its intraday trading record, which was set last year.

Despite strong stock market performance, optimism was in short supply.

The latest Barron’s Big Money poll showed money managers are less bullish than they were last fall. Just 38 percent were bullish or very bullish about the prospects for stocks in coming months, 46 percent were neutral and 16 percent were bearish. Their outlook varied by market. Overall, they were most enthusiastic about U.S., European and emerging markets:

  • U.S. stocks: 72 percent bullish, 28 percent bearish
  • European stocks: 66 percent bullish, 34 percent bearish
  • Emerging market stocks: 53 percent bullish, 47 percent bearish
  • Japanese stocks: 30 percent bullish, 70 percent bearish
  • Chinese stocks: 29 percent bullish, 71 percent bearish

The American Association of Individual Investors’ survey of investor sentiment reported, when compared with money managers, investors are less neutral (43 percent) and more bearish (24 percent) about what may happen during the next six months.

Current levels of pessimism might have inspired Sir John Templeton, a renowned contrarian investor. He once said, “Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.”

Data as of 4/22/16 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor’s 500 (Domestic Stocks) 0.5% 2.3% -0.8% 10.2% 9.4% 4.8%
Dow Jones Global ex-U.S. 1.0 1.7 -11.8 -0.3 -1.8 -0.5
10-year Treasury Note (Yield Only) 1.9 NA 2.0 1.7 3.4 5.0
Gold (per ounce) 1.3 17.0 4.5 -4.4 -3.7 7.2
Bloomberg Commodity Index 3.3 5.7 -17.5 -14.1 -13.8 -7.3
DJ Equity All REIT Total Return Index -1.7 4.2 5.1 7.8 10.6 6.7

Want Health? Get Outdoors

On average, Americans spend 91 percent of their time indoors or in a vehicle. Just 7 to 8 percent of their time is spent outside. These were the findings of the National Human Activity Pattern Survey (NHAPS), which measures variation in human exposure to pollutants.

The findings do not bode well for Americans’ health because levels of pollution indoors are a lot higher than those outside and can cause serious health issues. They also are notable because researchers believe being outside has positive health effects:

“Research published in the Journal of Aging Health shows that getting outside on a daily basis may help older people stay healthy and functioning longer. Participants in the study who spent time outdoors every day at age 70 showed fewer complaints of aching bones or sleep problems, among other health-related problems, at age 77 than those who did not head outside each day.”

Being outside is thought to have benefits for people of all ages. These may include:

  • Greater optimism
  • Enhanced mental health
  • Improved attention spans
  • Stronger immune systems

Rearranging time budgets to include more outdoor activities could improve financial outcomes, too, since health care costs are a concern for many families, and these costs often increase as people age. The Bureau of Labor Statistics reported, on average, Americans spent about $53,500 in 2014. Almost $4,300—about 8 percent—was spent on health care.

Weekly Fun—Think About It

“Everybody needs beauty as well as bread, places to play in and pray in, where nature may heal and give strength to body and soul.”

—John Muir, American environmentalist and author