Consumers are buying the dip

The worst performance in months didn't deter consumers. Even though the S&P 500 lost several percent in September, there was an increase in the net percentage of consumers who expect stocks to rise according to the monthly Conference Board survey.

Consumers expecting stocks to rise

There is a modest contrary bias to this data. When more consumers expect stocks to rise than fall, the S&P 500's annualized return is more than double when it is when consumers are less confident.

There is a tendency to think everything is a contrary indicator, especially when it comes to surveys of laypersons. That's not always the case, however, and knee-jerk contrarianism can be a deleterious habit. That's why we test things to the extent that we can. When we do that here, we can see that a jump in confidence during a down month isn't necessarily a bad thing.

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We also looked at:

  • Full signals showing returns following rising confidence in a down market
  • What happens when a lot of energy companies cut their dividends
  • And when they announce massive job cuts
  • Despite headlines, the volatility in oil has plunged
  • Sentiment toward many soft commodities has heated up

The post titled Consumers are buying the dip was originally published as on on 2020-10-02.

At, our service is not focused on market timing per se, but rather risk management. That may be a distinction without a difference, but it's how we approach the markets. We study signs that suggest it is time to raise or lower market exposure as a function of risk relative to probable reward. It is all about risk-adjusted expectations given existing evidence. Learn more about our service , research, models and indicators.

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