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420SEL · #14 01-02-2005, 10:35 AM

I didn't mean to suggest that the DOW should be used as the only decision making tool when it comes to investing, or determining asset allocation, or that it should even have prominence on a long list of factors to consider. The point of the poll is to get a gauge of sentiment of investors on this board. Liike all sentiment polls, most people respond based on general feelings or ideas, or based on what they heard Kudlow and Kramer say while chanel surfing. If I take my vote out of the poll, we currently have 75% of respondents indicating they feel the DOW will be up more than 5%, and only 25% say they expect the DOW to decline. While this survey is very unscientific and based on the number of respondents is statistically insignificant, it surprisingly does miror other recent surveys I have seen.

Investorsintelligence.com puts out a lot of market research. They track, among many other things, the bullishness or bearishness of investment advisors across the US. This survey currently has the highest reading of bullish responses since just prior to the crash in 1987. This number gets little attention in the media, and when it does, it gets the same treatment as consumer confidence numbers (which were pretty good this past month). The media, and most advisors declare a high bullish sentiment or a high consumer confidence number as a positive indicator for the stock market. If you take a look at the charts however, what you find is that these gresat numbers generally conicide with market tops. Most people are the most confident when things are already going well and when their investments have done well, not when conditions are generally poor, but about to get better.

I have been using the DOW because it is the index that most people are familiar with, that most people understand, and that most people are exposed to in the media. I'm not saying that exposure is warranted, and I'm certainly not saying its the best way to make investment decisions. There is a gresat deal of investor pyschology tied to those thirty stocks and combining the technical and behavioural aspects of what that index is doing in addition to the fundamental work can be beneficial to an overall understanding of the market movements.