Excerpt from fund manager John Hussman's weekly essay on the US market:
...the Russell Investment Group just published their quarterly money managers poll, which shows a fairly stunning 85% of advisors bullish for the coming year. Another roughly 4% expect a flat market, about 9% expect a decline of less than 10%, and just 2% expect a decline of 10% or more. That's amazing given that this is already the second-longest span on record for which the market has not experienced even a 10% correction.
In the latest poll of 80 analysts by Business Week, 71% of the analysts are bullish, with an additional 18% expecting positive returns but below the prevailing T-bill yield. 8% are slightly bearish - expecting a decline of less than 10%, and just 3 of the analysts expect a decline of 10% or greater. Evidently, there's not a lot of “buying power” available from converting that tiny pool of remaining bears, but there's a lot of room available in the bearish column in order to populate a more typical divergence of opinion.
Meanwhile, the “smart money” shows a distinctly different pattern. The latest figures from Vickers show heavy insider selling at 8.4 shares sold for every 1 share purchased. The 8-week average is running at a ratio of 6.9 to 1. As Paul Macrae Montgomery asks, “ We keep reading about how the share buy-backs, cash takeovers, and leveraged buyouts are proof positive that stock prices are a great ‘value'. Well if stock prices are such great values, why is it that all this buying is being down with ‘other peoples money,' and why are the savvy insiders simultaneously selling their own stock?”