IB Net Payout Yields Model

Stat of the Day: Stock Allocation at 58%

From the chart above, Bespoke provides a nice picture of how the market has become so momentum based. Stocks fall and the allocation recommendation for stocks drops as well. Most analysts would advise the opposite if writing a textbook, but when it comes to real world applications it seems that people pull out of stocks at the lows and pile in at the highs. This is another of the historical indications we have regarding buying stocks now.

The average recommendation has dropped from 68% to 58% even though the market is back to the area of the 2003 lows. Just another indication of how the attitude towards stocks has dramatically shifted since 2000.

With gas prices and interest rates falling on a daily basis, its difficult to envision how the market will remain weak much longer. Americans like to spend and the stars are aligning for a great big shopping spree. Valuations and just too cheap to ignore.


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