AOL Money & Finance

Consumer sentiment as a contrarian indicator: Time to buy stocks?

Posted May 5th 2008 4:05PM by Zac BissonnetteZac Bissonnette RSS Feed
Filed under: Market matters, Economic data, DJIA

More

The Reuters/University of Michigan Surveys of Consumers shows consumer sentiment at a 26-year low: "The April result is the lowest since March 1982's level of 62.0., when the "stagflationary" period of low growth and high inflation was still an issue for many Americans."

But is that a bad thing? A quick look at history shows that it probably isn't. The last time consumer sentiment was this low was right before the beginning of the longest bull-run in history. The best book on that era is called Bull: A History of the Boom and Bust: 1982-2004. The chart below of the Dow Jones Industrial Average performance during 1980-2000 pretty much tells the story. See the little divot on the far left side? Yeah, that was 1982.

So don't get too depressed about consumer weakness. The last time things looked this bad, they ended up working out better than ever. And anyone who sold on the scary headlines regretted it very quickly.

Tags: consumer sentiment, ConsumerSentiment, djia, dow jones, DowJones

Reader Comments (Page 1 of 1)

Symbol Lookup
IndexesChangePrice
DJIA-154.4810,309.92
NASDAQ-37.612,138.44
S&P 500-23.411,087.22

Last updated: November 27, 2009: 04:17 PM

BloggingStocks Exclusives

Hot Stocks

DailyFinance Headlines

Latest from BloggingBuyouts

TheFlyOnTheWall.com Headlines

BioHealth Investor Headlines

WalletPop Headlines

My Portfolios

Track your stocks here!

Find out why more people track their portfolios on AOL Money & Finance then anywhere else.

  • My Portfolio
  • Create a New Portfolio

BloggingStocks Partners

More from AOL Money & Finance

WalletPop Headlines