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2023 Mid-Year Market Outlook

Financial Decoder

CHAPTER

The Effects of Market Sentiment on Investors

The good near term news is a move up from more pessimistic territory into more optimistic territory for aggregate measures of sentiment usually serves the market well. At extreme sentiment tends to act as a contrarian indicator not with any kind of perfect timing but I'd say now fast forward today we're starting to see some froth build again it's not the meme stocks this time it's anything AI related and that helps to explain the bias of concentration amongst the large cap names. If that continues and gets to a real extreme that's when you start to run into problems so that'sSomething I'll be watching as we get to the middle part of the year is whether some signs of froth turn into more overt

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