Sentiment Can Change... Fast

Summary

• The SP500 vs PMI, IndPro from Feb 1977 demonstrates the consistency of investor fears vs declines in the SP500 and the many recoveries large and small since.
• The PMI often declines when there is no decline in IndPro (Industrial Production that it is supposed to predict). There are multiple instances when the PMI’s predictive signal occurred after a recession had initiated.
• PMI and SP500 correlations amply demonstrate that making new investments during periods of stress has always proven positive, especially if companies are well-managed.

Maksim Labkouski

If there is one truism of investment markets in terms of achieving a lower risk but higher return, it is that one should own what others do not find attractive. Markets have always cycled with investor psychology, and buying cheaply