Market Indicators: The Best-Kept Secret to More Effective Trading and Investing

Chapter 7. Sentiment Surveys

	When there is a boom and everyone is scrambling for common stocks, take all your stocks and sell them. Put the proceeds in the bank. No doubt, the stocks you sold will go higher. Pay no attention to this—just wait for the recession which will come sooner or later. When it gets bad enough to arouse the politicians to make speeches, take your money out of the bank and buy back the stocks. No doubt the stocks will go still lower. Again pay no attention. Wait for the next boom. Continue to repeat this operation as long as you live, and you'll have the pleasure of dying rich.
	--FRED SCHWED JR., Where Are the Customers' Yachts?: or A Good Hard Look at Wall Street, 1940

	The most common cause of low prices is pessimism—some times pervasive, some times specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces. It's optimism that is the enemy of the rational buyer.
	--WARREN BUFFETT, in his 1990 annual letter to shareholders

Just as politicians take straw polls to gauge public opinion, a variety of established surveys track how investors currently view the market. In revealing an opinion, investors also typically reveal their current market positioning. Investors bullish on the future, for instance, are likely already fully committed in stocks. They "talk their book" or believe according to how they're positioned.

This chapter's surveys examine investor outlooks in ...