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400 Analysts and Economists Are Bullish. But Before You Join Them, See This Chart
Most investors have very short memory. You don't have to be one of them

By Vadim Pokhlebkin
Wed, 04 May 2011 17:30:00 ET
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Please read these financial news headlines and then take a guess as to when they were published: 

    • Fed chief predicts economy will rebound despite housing woes (AP)
    • IMF predicts an energetic world economy (StarTribune.com)
    • World economy in robust health despite US slowdown... (Agence France-Presse)
    • US Treasury says economy strong...‎ (Reuters)
    • Job Growth Strengthens Economy (Washington Post)
    • Several Signs the Economy Is Reviving (New York Times)
Did they publish this week? Last week? Last month?
 
No.
 
All these headlines published in April through July of 2007.
 
That's right: All these reports came out right before the 2007-2009 global financial crisis crashed markets around the world. In 2007-2009, the DJIA fell 54%, S&P 500 and CRB Commodities Index lost 57%, oil declined 78%. Gold, emerging markets and real estate also fell hard. Bonds were no "safe haven," either: The U.S. 30-year bonds and 10-year notes in 2009 had their worst year on record: down 26% and 9.7%, respectively.
 
To see this in graphic terms, this chart (courtesy: Bloomberg) shows when those optimistic news reports published. 
 
 
 
"So what," someone might say -- "The economists blew it big time in 2007, but how's that relevant today?"
 
Here's how: Read this quote from the April issue of Elliott Wave International's Elliott Wave Financial Forecast.
 
"...a new Reuters poll of 400 analysts and economists [shows] bullish year-end outlooks registered in all 18 stock indexes surveyed. 'As always, respondents were very bullish on stocks...'"
 
To most investors, the current bullishness only serves as reassurance: If these professionals are so bullish on stocks, it's safe for me to be bullish, too.
 

 

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