Earlier today, we brought you the following chart which certainly seems to suggest that “groupthink” has taken hold in markets – and “bigly”:
So according to Yale’s one-year investor confidence indices both the “smart” money and the “dumb” money are now 100% confident that nothing can go wrong (basically – the individual survey is at 98.92).
Well that prompted us to take a look at the “Crash Confidence Index, which as Yale explains, is “the percent of the population who attach little probability to a stock market crash in the next-six months.”
They clarify further: “The Crash Confidence Index is the percentage of respondents who think that the probability is less than 10%.”
Ok, so it turns out the latest reading on that for institutions is 29.55%. Or, put differently, less than 1/3 of institutional respondents are willing to say that the risk of a stock market crash is less than 10%.
Meanwhile, the cost of protecting against a crash remains elevated after hitting an all-time high in March.
So let me get this straight…
100% of institutional respondents gave a number greater than zero when asked how much of a change in percentage terms they expect for the Dow in 1-year, but only 29.55% were willing to say that the chances of a “catastrophic stock market crash in the U.S., like that of October 28, 1929 or October 19, 1987, in the next six months” was less than 10%.
And meanwhile, the cost of protecting against just such a “catastrophic stock market crash” remains elevated.
Something doesn’t add up there.Subscribe to NFTRH Premium for your 40-55 page weekly report, interim updates and NFTRH+ chart and trade ideas or the free eLetter for an introduction to our work. Or simply keep up to date with plenty of public content at NFTRH.com and Biiwii.com. Also, you can follow via Twitter @BiiwiiNFTRH, StockTwits, RSS or sign up to receive posts directly by email (right sidebar).