As a Credit Analyst (corporate bond analyst) and a Fixed Income (bond) Portfolio Manager, I am naturally skeptical about everything.
Think about it...you buy a bond at Par ($100.00) and hope to collect your coupon for the life of that bond and then get paid back at maturity. If the company's prospects improve and the bond moves higher in price, that is a bonus. What we question is how we could get !$^&%%$ if the company's prospects and cash flows decline and the price of the bond follows suit into the sewer. So as a credit analyst, we question everything and are naturally a dour group of folks more worried about the downside than the upside. Such is our lot in life.
With that dourness, comes a spoonful of contrarianism as well. It too comes with questioning everything a management group tells you, what conventional thought claims and what markets are saying.
This morning at 10am, the University of Michigan (Go Blue!) released it's Sentiment Indicators for mid Sept to mid Oct. Remember, these Sentiment Indicators are considered "soft" economic data as they are simply surveys, not "hard" economic data (even those are probably manipulated by various government agencies...there I go again questioning everything).
Within the various Michigan surveys reported this morning, they reported that respondent's confidence in a rising stock market (in the USA) for the next 12 months is the highest...ever! My contrarian senses kick up a gear when I see this type of sentiment from retail investors. Water sure feels warm...come on in:
We never know what the event will be that may knock a heated market lower but we can pay attention to conventional thought and be prepared.