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AAII Sentiment Survey: ‘Running of the Bulls’


It’s that time of year again.

Tomorrow morning, thousands of adventurous (or phenomenally stupid) young men from around the world will run with the bulls in the streets of Pamplona.

I was one of those adventurous (let’s be honest — phenomenally stupid) young men once (see “¡Viva San Fermin!“). Though it was over a decade ago, I remember it like it was yesterday.

Lest I get teary-eyed, I’ll cut the nostalgia short. Today, we’re going to focus on a very different “running of the bulls.” Among individual investors, it seems there is nary a bull to be found these days. According to the latest American Association of Individual Investors (“AAII”) Sentiment Survey, there are fewer bulls today than at any time since the 2008 meltdown:

The AAII survey measures the percentage of individual investors who are bullish, bearish, and neutral on the stock market for the next six months. To smooth out the noise a little, I used an 8-week moving average. And as you can see, bullishness is currently at lows you might normally associate with panic bottoms.

The weekly reading shows that just 22.6% of individual investors are bullish about the market over the next six months. To give a little long-term perspective, the long-term average bullishness reading is 38.8%.

While it has become cliche to call this “the most hated bull market in history,” at least by this metric it would seem like an accurate statement.

The AAII Sentiment Survey is viewed by many as a contrarian indicator. Like most measures that depend on investor psychology, it is noisy and doesn’t always give clear signals. But the takeaway here is that the bull market probably has a little longer to run. Yes, stocks are very expensive at these levels and probably won’t offer much in the way of returns over the next 8-10 years. But that doesn’t mean the market can’t continue to drift higher for the next several months.


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Why Americans Don’t Celebrate May Day

I had a colleague from South Africa ask why we don’t celebrate May Day as a holiday in America. The answer, of course, is that May 1 was the date chosen by the communist leadership of the Second International  to be the International Workers’ Day. It’s kind of anathema to celebrate international communism here. Just sayin’.

And I still contend that if we celebrate working slobs with Labor Day, we should also have Entrepreneur Day as a holiday. Except that no one would celebrate it, because all the entrepreneurs would be at their desks working, building the future.

For what it’s worth, I celebrate neither May Day nor America’s late summer Labor Day. I make sure to do at least a little work on both days…just as a matter of principle.

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This is why I love Switzerland

This story has absolutely no economic significance. I’ve just always admired the Swiss approach to national security, and I’m a little sad to see the bombs under their bridges dismantled.

With its cobbled streets and ornate houses, Bad Säckingen has little of the front line about it. But until recently, that is exactly how Swiss military planners conceived the picturesque town on the banks of the Rhine.

Like numerous other crossings between Switzerland and Germany, the bridge linking Bad Säckingen on the German side with Stein in Switzerland was fitted with explosives so that it could be detonated in the event of an attack.

The incendiary devices were part of a last-ditch defensive system built to protect Switzerland during the cold war. It is only now, 25 years after the collapse of communism in eastern Europe, that the last vestiges of that system are being dismantled. Due to be completed by year-end, by a quirk of fate the conclusion of the process comes just as east-west relations are at their lowest ebb since the fall of the Berlin wall.

Switzerland installed the explosives at strategic locations along its borders and on transport routes as early as the 19th century, and did so on a larger scale during the second world war. But it was only in 1975, with the introduction of what was known as the Permanent Explosive Deployment 75 programme that it took a more systematic approach to where it planted the hidden charges.

At its peak, the Swiss defensive network involved roughly 2,000 separate structures fitted with explosives. These ranged from bridges to tunnels — such as the Gotthard tunnel through the Alps — to roads and airstrips.

The idea was that the explosive-laden structures would deter aggressors considering an invasion. Failing that, the series of defensive lines would slow down and use up the resources of the invaders to give the Swiss time to prepare their defences.

Full Financial Times article can be read here.

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Holiday Shopping: Olaf Dethrones Frosty While Elsa Reigns Supreme

Last month, I wrote that pre-holiday shipments of Frozen merchandise pointed to a blowout year for Disney (DIS). Today, I have some updated numbers to share from global trade site Panjiva.

Frozen Graphic

Some points worth noting:

  • Olaf is the new Frosty. Olaf merchandise shipments outpaced Frosty the Snowman merchandise shipments by 77%, and this despite Frosty having a multi-decade head start on the upstart Olaf. Frosty merchandise is actually down by more than 30% year over year.
  • Elsa remains the queen. Shipments of Elsa merchandise outpaced that of sister Anna by 74%.

From Panjiva:

Frozen has already shattered records as the highest grossing animated film of all time, and stands as the fifth highest grossing film ever with ticket sales of more than $1.2 billion globally. According to shipment data from Panjiva, consumer demand for all things Frozen shows no signs of slowing. From August to October, the time when retailers stock their shelves for the holiday season, shipments of Frozen merchandise showed an increase of more than 470 percent in 2014 compared to the same time period in 2013. Furthermore, shipments of Frozen products were more than double the combined number of shipments seen from last year’s favorites, Sofia the First and Doc McStuffin, with a total of 1,267 Frozen shipments entering the U.S. ahead of the holiday shopping season.

The Christmas holiday season is getting off to a rough start, with Black Friday sales down an estimated 11%. But as I noted late last month, overall holiday shipments are up about 5% and toy shipments are up about 3%. Those are not stellar numbers by any stretch, but they do suggest that this year’s sales will end up being modestly bigger than last year’s once the registers stop ringing.

Charles Lewis Sizemore, CFA, is chief investment officer of the investment firm Sizemore Capital Management and the author of the Sizemore Insights blog.

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Is Depression the Mark of a Strong Leader?

Harry Dent had some interesting thoughts on depression.  You would think that depressed people would be failures in life, but in fact the exact opposite is true.  Many of the most successful people in history faced chronic depression.  It was their emotional struggle that made them into the leaders that history remembers.  Here’s an excerpt of Harry’s piece from Economy and Markets.

My father worked in politics with many great leaders [Note: Harry S. Dent, Sr. was a prominent power in the Republican party for decades and worked closely with Richard Nixon, Strom Thurmond and Barry Goldwater–CLS]. I also had the opportunity to speak, and work with many great communicators and entrepreneurs. It’s appropriate for most people to admire accomplished leaders… but on the inside, they also get envious. They wish they could be like them.

Remember the old adage — be careful what you wish for…

Being an entrepreneur or a great leader can take you down a very lonely path.

You don’t have many peers with which to socialize and often, don’t have any. You’re typically swimming against the current like a salmon moving upstream. The leader role takes a great level of commitment and you end up not having many opportunities to be with family and friends like most of us do…

I recently watched an incredibly interesting documentary on the Roosevelt family as they showcased the true-life challenges they faced. As a child, Teddy was a sickly child and almost died from an asthma attack. It’s hard to believe because of his robust nature as an avid outdoorsman and hunter… as well as a bold leader.

FDR not only had polio but he also suffered from depression and frequently isolated himself because of his workaholic nature. Yet he led our nation through a depression and a World War. After his death, his wife Eleanor went on to great achievements yet behind the scenes, she too suffered from depression.

Just days before watching this documentary, I heard about Robin Williams’ suicide and then Joan Rivers’ accidental death. Two talented celebrities — Williams was a great comedian and actor and Rivers was one of the top female comedians in history.

Both battled depression their entire lives and despite of it… were incredibly successful. Williams was also plagued with drug and alcohol addiction and Rivers was an intensely busy workaholic, even at 81.

Then I recalled a special I watched on Abraham Lincoln. No one had to tell me he was depressed. He’s perhaps the most depressing looking leader I’ve ever seen in history. He was treated for melancholia and was even placed on suicide watch during his presidency…

Look at Winston Churchill… another leader who was depressed and a heavy drinker. He’s said to have called his depression his “black dog” that followed him around. Churchill even avoided ledges and train platforms. He’s reputed to have said that you never know when a whim will overtake your sense of self-preservation. Yet his contributions to the political history of Great Britain are huge.

Depression is perhaps the most intolerable of emotional afflictions and if you can conquer that, you can probably conquer pretty much anything. But it can certainly prove to be a strong motivator that will get you off your ass to do something.

I was talking to one of the best speakers in his field of sales training and he told me that he had learned that he was inclined to depression. He found that working and being constantly engaged was the best and healthiest antidote for it.

Success Through Hardship

I realized through all of this that the underlying common thread in all of these leaders and successful individuals is the presence of depression… and it all fit together…

So here’s my first insight… if there weren’t a small percentage of depressed and otherwise so-called “afflicted” people in society; we wouldn’t have the innovation and leadership that has driven our remarkable progress, especially over the last few hundred years.

We should appreciate such people for the internal battles they have to fight, not just the external ones they tend to win. But you may want to think twice about envying them and wanting to trade places.

I don’t like calling things like depression, bipolar disorder, ADHD, etc… “diseases” or “afflictions”. I think that we should learn to look at and work with people simply in terms of their strengths and weaknesses.

As Peter Drucker said: “Great people have great weaknesses.” But they obviously have great strengths as well. Everyone should learn to focus on their strengths and to minimize, or offset, the weaknesses where possible. If you’re depressed and want to address it, it’s better to be a workaholic than an alcoholic.

To read the full article, see Depression and the Economy of a Country.

Charles Lewis Sizemore, CFA, is the chief investment officer of the investment firm Sizemore Capital Management. Click here to receive his FREE weekly e-letter covering top market insights, trends, and the best stocks and ETFs to profit from today’s best global value plays. 

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