|Outside-the-box thinking might be investors’ best bet these days.
A note from Bank of America pointed to its Sell Side Indicator, which flashes bullish signals when Wall Street becomes overly bearish.
The contrarian sentiment gauge is currently neutral, but it’s three times closer to a “buy” signal than a “sell” one. At its current level, it’s suggesting about a 15.5% gain in the S&P 500 over the next year.
Such strong stances come at a unique time for the market, as many investors are waffling over where things are headed.
Any positives for the market — strong earnings, GDP growth, pause on rate hikes — have been coupled with negatives — troubling year-end forecasts, rising bond yields, increasing geopolitical risks — over the past few months.
Having conviction and staying away from popular stocks might be investors’ best bet.
Of course, it won’t happen overnight. Bernstein told Jennifer not to expect a similar market rally in the wake of the pandemic. A more accurate comparison, he said, would be when S&P 500 leaders lost value in the 2000s while underdogs performed.