Caitlin McCabe

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57 appearances 1 recordings 1 series first heard Jul 2021 last heard Jul 2021

Caitlin McCabe’s voice in public audio — every appearance, attributed to the second.

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WSJ Your Money Briefing · Does the Stock Selloff Indicate a Shift in Investors' Outlook? · 20 Jul 2021 podcast

And that's stumping analysts and investors who have been sort of bracing for this pullback due to these high sentiment levels that we're seeing.

And yet the markets just keep rising for, you know, the first six or seven months of this year so far.

Thank you for having me.

So market sentiment is basically just a fancy way of saying how are investors feeling about the market?

Are they bullish or are they bearish?

Do they think stocks will keep rising or do they expect that they'll fall?

So pretty much since the end of last year and throughout most of 2021, we've seen extremely bullish, exuberant sentiment in the market.

And we've seen that in a lot of different ways.

We see that Americans are allocating more money to stocks than they have in about 20 years.

We see it in the options market where we've been seeing far more bullish bets than bearish ones.

And we've seen it in surveys as well as record amounts of money that are flowing into equity funds and stocks.

And so there are several different indicators that measure sentiment.

And for most of 2021, they've all been overly optimistic.

So in the markets, the thinking has been that once everyone around you is talking about investing in the stock market, it's probably a good time to sell.

And so historically, that's been a pretty surprisingly good indicator.

You know, once we've seen sentiment get extremely optimistic, we've seen that markets do ultimately pull back at some point.

You know, a good comparison is the dot-com bubble of the late 1990s.

We were seeing similar levels of bullish sentiment in the same way that we are now.

And of course, we all know that that bull market back then didn't last forever.

So the big difference is that throughout 2021, with Monday's pullback in the market aside, we've seen this extremely bullish sentiment, and yet major US indexes continue to rally to records.

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