6/20/2014
By Charles Payne

Ebullient

An immediate, and ultimately short-lived, reaction to a particular event — for example, if you had just won the lottery, you would feel ebullient.

Someone perpetually upbeat and cheerful – for example, as in "an ebullient personality," watch out for ebullient personalities: they can often be "over the top" as well.

Vocabulary.com

It has been a longtime since popular music, or musicians were once described as “Ebullient.” However, back in 1959, that is how the world viewed Mr. Dizzy Gillespie. Back in those days, jazz was pop and all the rage. As it turned out, 1959 was a pretty good year for the United States…one could say that it was an ebullient time.

• GDP +6.9% after tumbling -0.7% the preceding year
• America peaked with the largest percentage of global GDP
• Total debt as percentage of GDP was 2/3 less than today
• Alaska and Hawaii became states

The American Association of Individual Investors (AAII) recently released its latest survey on sentiment, reflecting a decline in bullishness. Investors are not ebullient, even if more of them are dipping a toe into the water.

May and June marked the beginning of seeing continuous new highs for equity indices. Employment and consumer sentiment improved and resulted in consumers being confident enough to invest in residential properties and personal businesses. Despite how exciting the past few weeks have been, a lot of worry still exists about where the economy and stock market are headed.

This week, the American Association of Individual Investors (AAII) sentiment survey showed that investors have been struggling to decide whether or not the market is bullish or bearish. A majority of investors voted that they were neutral on the topic for the past two months. Luckily, the amount of investors who viewed the market as bearish has remained below one third of all investors for the same time period. Bullishness on the other hand, has been spiking up, reaching 44.7% last week, before sliding back down to 35.12% this week.

The enthusiasm from investors is bound to bring about market tops. The time to join the rallying market has passed, especially as earnings season is upon us. Individuals who enter the market now are bound to experience some short-term losses on even the best companies, but as always, the market itself is going to continue climbing in the long-term.

The fact is, just as music has evolved since the cool age of jazz, so too have investor attitudes about the market. Of course, music’s course seems linear from jazz to rock, to acid to punk, and to heavy metal, which shared the charts with disco, and then various forms of rap, including gangster rap. (Country music evolved as well, although I prefer the older stuff to the more pop-light offerings today.)  What is interesting is that investors get the blame for being too enthusiastic and creating market tops, but one has to consider that perhaps market rallies fan the flames of unbridled excitement. It is sort of a chicken and egg kind of thing. On that note, the bullishness among individuals has coincided with market tops, and that is the good news because individuals are anything but ebullient.

Charles Payne
Wall Street Strategies

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