Our April Market Forecast Project - Pros vs. Joes

by: Value Expectations

In the latest edition of the Market Forecast Project (MFP) investor sentiment poll, which was originally designed for only professional investors, The Applied Finance Group (AFG) also invited individual investors to participate. We included individual investors to be able to compare and contrast the views of Investment Pro’s vs. Average Joe’s to see if there are any major differences in opinion regarding the stock market and overall economy.

For the most part the individual investor’s sentiment toward the market/economy was in-line with those of the investment pros throughout the survey. Let’s take a look at a few of the questions.

If you would like to participate in the next MFP and be among the first to receive the results click here.

Question 1 - Do you think the equity market, the S&P500 in particular, is Overvalued? Fairly Valued? Undervalued?

• Pros tended to lean towards the middle, stating that they believed the S&P 500 index is currently fairly-valued, whereas the Joes tended to be more polarized.

Question 2 - Would adding a VAT to our existing tax structure help or hurt the economy long term?

• Both Pros and Joes were overwhelmingly in agreement that the addition of a VAT would hurt our economy long term.

Question 3 - President Obama announced plans in early March to double the US exports in 5 years. Do you think this is feasible?

• Nearly 3 times as many Joes (on a percentage basis) believe this plan is feasible.

Question 4 - Do you think the current equity market has priced in the upcoming tax increases, which are a result of the Bush tax cut expiration and the passage of the healthcare bill?

• Joes were more of an even split while Pros had a much larger majority who believe upcoming tax increases have not been priced into the current market.

Question 5 - What area of the US Equity market seems more attractive to you over the next 12 months?

• Joes were close to evenly split whereas Pro’s were 2 to 1 in favor of the Large Caps. When asked about whether the S&P 500 will rise or sink over the next 90 days, the Joes group showed much higher majority of bullishness for the index.

Question 6 - In the next 3 months, will the S&P 500 be higher or lower?

• The Joes group showed a much higher majority of bullishness for the index.