“If you expect nothing from anybody, you’re never disappointed,” Sylvia Plath wrote.
If the same holds when nothing much is expected from markets, then maybe investors and forecasters are insulating themselves from deep disappointment from stocks next year.
Typically in December, professional investors and analysts can summon a bit of enthusiasm for why the approaching new year can be a pretty good one for stocks. Corporate profit estimates almost always start optimistic enough to substantiate projected market gains, and a mechanical rush of fresh money into stocks is anticipated.
Right now, though, caution has encroached on cheer. The weekly surveys both of investment advisors and retail investors are pretty evenly split between bulls and bears. The Daily Sentiment Index for the Standard & Poor’s 500, based on the activity of smaller futures traders, sank to 5 on a zero-to-100 scale after Friday’s high-volume selloff.
By most observable measures, hedge funds have generally been reducing their market exposure toward a neutral state for the past couple of months.
Brokerage-house strategists — stereotyped a bit unfairly as perpetual cheerleaders for stocks — are not promising great things for 2016 as a group. A dozen year-ahead predictions by such strategists yields …