Fearful When Others Are Greedy | Seeking Alpha

Fearful When Others Are Greedy | Seeking Alpha



This is an outstanding article about what happens at stock market tops.  The author presents a chart where bull/bear sentiment is shown at record levels.  The last bear market as well as the severe 2011 correction occurred right after bullish sentiment rose above 40.



Secondly, the author showed a table where stock market gains were near zero when bull/bear sentiment was over 40%.  So, you are better off buying dividend stocks which pay 5% of more annually while the market is rounding out the top of the current bull market. Eventually, the stock market will have a big correction or another bear cycle, but nobody knows the exact timing involved.  Getting paid now with dividend stocks may be our best option.



Another point the author made is that XLU (utilities) and TLT (20+ year treasury bonds) have outperformed the Russell 2000 this year. You could allocate part of your portfolio to these stocks for further diversification which is profitable so far in 2014.  Strict sector allocations provide safe above average market returns over a period of several years.