Investors Still Not Sold on This Bull Market

The U.S. stock market has been hitting continuous new highs and in the last two years the Dow is up 30% (and up 100% from five years ago). And yet investors are still wary of getting into the market, according to recent poll results.

Alexander Green of Investment U continuously points out that bull markets are born on pessimism, grow on skepticism, peak on optimism and die on euphoria. Essentially, when the mom-and-pop investors get back into the market, that’s when the bull market is coming to an end.

Just look at where investor optimism was before the recession. The Wells Fargo/Gallup Investor and Retirement Optimism Index found that, out of 200, investors’ optimism had been a 95 just before the recession — the highest since the dot-com bubble burst.

The good news for investors currently in the market, then, is that there’s still plenty of skepticism, which means this market still has some room to run. According to a recent Gallup poll, half of Americans still say that investing $1,000 in the stock market right now would be a bad idea.

The last time more Americans thought investing in the stock market was a good idea was just before the recession.

Only 54% said they own stock, which is close to the lowest percentage in 16 years. A December 2013 poll revealed that barely a third of investors believe the market is a good way to build wealth. Although, those with $100,000-plus in assets are significantly more upbeat — 50% positively rate the market’s value as a wealth generator.

Gallup has also been tracking investor optimism and found that, out of 200, investors’ optimism had been a 95 just before the recession — the highest optimism had been since the dot-com bubble burst.

Perhaps the reason they’re still not very optimistic is the fact that they didn’t really benefit from the surging market. A June 2013 Gallup poll found that 54% of respondents believed they benefitted “a little” or “not at all” from record highs. And despite the market hitting those highs 87% admitted that they didn’t increase (or decrease) their investments.