Spectrem released the numbers for their Affluent & Millionaire investor confidence indexes today and the Affluent index dropped to an 8 month low. While the information available on the indexes are limited, I used the charted data on the link above and placed it against the performance of the S&P 500 (S&P values on the right axis, index values on the left).
At first glance, it appears that investor confidence is a great contrarian indicator. Referring back to the index information, looking at the long-term information on the bottom of their chart, it seems as though investor pessimism reached it’s peak right as the market approached bottoms in 2010, 2011, and early 2012. Is this a good time to buy?
Maybe I’m biased as a contrarian, value, long-term investor… but it seems wise to avoid moving with the masses. Be a hipster investor, if you will (even if you hate hipsters).