How Are You Feeling?

Over these last 15 years, you have been whip-sawed unmercifully and the headlines have done nothing but send you down the wrong path.  Are you looking out for black swans or sunshine today?  I think I know that answer already for the majority of you as we look at the historical records of consumer sentiment.

In the graphic above, you can see the relation between consumer sentiment and the stock market over the last 35 or so years.  You can see how we've now spent almost six years with consumer sentiment under the "80" level now.  You can see how this has only occurred a few times over the time frame shown above and that periods such as this have represented tremendous potential.  You can see in the charts how periods in the past with similar levels of skepticism and fear as today have produced massive bull markets in their wake.

We all have our logic that gets distorted based on what has happened in the last few years.  This has been a very volatile time, and we live in a world that is so much different than our past believes is normal.  That is one reason that it took so long (15 years) for most investors to really believe that lower inflation and lower interest rates were here to stay back in that 1980 to 1995 period.

This, my friends, is the Technology Revolution, and as a result, "the new Flat World."  The good news is that of all the countries in the world, the US comes out of these last 15 years of volatility stronger in a competitive sense against every country in the world.  That is what this stock market is telling us and the message is far from over.

Don Hays

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