"Anger at Optimism:" Investor Frustration Rises with the Market, Sonders Says
Posted Sep 08, 2009 11:09am EDT by Aaron Task in Investing
Related: ^DJI, ^GSPC, SPY, DIA, QQQQ, BGU
Investors returned from the Labor Day break in a buying mood Tuesday morning after the G20's pledge of more stimulus and more M&A activity gave global stocks a boost.
Normally a continuation of such bullish market action would make most investors happy, but not this time around, says Liz Ann Sonders, chief market strategist at Charles Schwab & Co.
"There has been an amazing amount of anger in this cycle, most of it justified," Sonders says. "People are angry at capitalism, Wall Street, CEOs, regulators, the media. The list goes on and on. There's even anger at optimism right now."
Many investors who've been out of stocks or underweight are increasingly frustrated as the proverbial market train has left the station, she says. "It's odd with this improvement in the economy and much stronger market there's not a lot of joy."
Indeed, from sentiment polls to mutual fund inflow data and cash on the sidelines, there's a lot of evidence that investors don't fully believe in the rally, individual investors particularly. While that's understandable given the events of the past two years, it's also "a good thing from a contrarian perspective," Sonders says.
As with most observers, Sonders believes the "easy money" part of the rally is over and stocks are now fairly valued. The market is likely to move "marginally higher" in the next few months with "a little bit more volatility" vs. what's occurred in the past six, she predicts.
Paradoxically, what concerns Sonders most right now is that the economy will continue to surprise on the upside and "cause people to question whether the Fed can stay on hold and keep rates low for an extended period of time."
That's not an imminent risk but something to keep on your radar screen, she says, as we'll discuss in more detail in a forthcoming segment.
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