A renowned money manager used to remind us, “the stock market is the manifestation of public sentiment.” That’s a powerful statement, so simple, so profound, it’s worth repeating.
“The stock market is the manifestation of public sentiment.”
The stock market tells us how people are feeling. Not about the past. Not about the present. About the future. Today investors are afraid of a recession, disappearing corporate profits, and falling stock markets.
At some point, investors will see past that future and see another future. They will recall that all crises end, coronavirus will not stop the world, the economy will once again grow and then corporate profits will recover and push stock markets back up. Sentiment will turn from fear to confidence.
Furthermore, investors will remember there is a ton of money sitting in cash and bonds earning almost nothing. The unhappy owners of this tired money will migrate to stock markets seeking better returns. Then sentiment will advance from confidence to eagerness, and stock markets will climb more.
If history repeats itself, and we think it will, the rebound will be sooner and bigger than most people expect. That’s history. That’s the stock market. “The stock market is the manifestation of public sentiment.”
This memo was prepared solely by Terry and Patty Rempel who are registered representatives of FundEX (a member of the Mutual Funds Dealers Association of Canada and the MFDA Investor Protection Corporation). The views and opinions, including any recommendations, expressed in this memo are those of Terry and Patty Rempel. Bluestone Financial is a personal trade name of Terry and Patty Rempel.
