Investor Sentiment And Your Portfolio

Have you ever stepped back to observe stock or crypto market activity and just scratched your head wondering what in the world investors are thinking? ​​Why are investors snatching up stocks of failing or flailing companies? ​​Why are people buying cryptocurrencies that have no practical use – such as Dogecoin, which started as a parody of bitcoin.

Many things don’t make sense in the public markets right now, and if you go by investor sentiment, you’ll be even more confused.

The S&P 500 is currently trading around its all-time high, but you wouldn’t know it from investor sentiment. According to several market sentiment indicators, investors remain skeptical of the rally in stocks.

Typically, when the market is trading at near market peaks, investor sentiment usually follows. Investor sentiment typically registers in the “greed” or “euphoria” categories, not “fear” as it is reading now. A market sell-off usually stems from fear.

Investors have reason to be fearful. Inflation is creeping in; quarterly earnings calls are underwhelming – highlighting the disconnect between stock prices and underlying fundamentals.

Despite all the warning signs, Wall Street is trying to spin the “fear” narrative into something positive to spur continued trading.

​​According to a recent businessinsider.com article, fear is a sign of opportunity. In the article:

​”The readings of ‘fear’ with the stock market near record highs suggests that there is further upside ahead for equities, as the market continues to climb a wall of worry and win over unconvinced investors.”

Does fear mean there’s still room to win over unconvinced investors? There’s still room to grow? Wall Street will say whatever it takes to keep the gravy train rolling.

While many investors wait with bated breath to see how other investors behave in the market, a segment of investors could care less about investor sentiment.

  • They don’t leave their portfolios in the hands of investors driven by emotion and sentiment.
  • They don’t invest in assets like Bitcoin that can lose half their value in just a matter of a couple of months like Bitcoin recently experienced.

When investors are jittery, my experience has been that the typical reaction is to run away and not towards the fire, as Wall Street pundits suggest.

How do savvy investors shield themselves from investor sentiment?

They don’t play in the same sandbox. Ultra-wealthy investors play in a private sandbox.  

The public markets are susceptible to investor sentiment because of liquidity. It’s easy for investors to jump in and out of stocks and crypto in a matter of minutes. With the rise and proliferation of social media, stocks now move in large chunks as investors hop on and off the latest bandwagons. This has all contributed to heightened market volatility.

Savvy investors allocate to assets that are more “grounded” – or, as I like to say, “in the ground” – than their public counterparts.

​​Private investments in tangible or “in the ground assets” shield portfolios from investor sentiment and stock market volatility.

​​Jumping in and out of real estate and business positions can’t be done as easily as with stocks. Passive investments typically have lockup periods of a minimum of 5-7 years – restricting liquidity even further. It’s this clampdown that protects private investors from other investors and even themselves.

Many experts predict a rocky road ahead for stocks and crypto as investor sentiment gets more jittery.

​​Why subject your portfolio to this madness? Be smarter than the average investor. There are ways to avoid all of this chaos.

Find out how you can avoid ever-changing investor sentiment by joining our private investor group and learning from experienced investors who have been able to avoid the chaos of Wall Street time and again through private investments.

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About the author

Kyle Jones is a co-founder and Key Principal of TruePoint Capital, LLC. Kyle is responsible for the company’s strategic planning, investment decisions, asset management, and overseeing all aspects of the company’s financial activities, operations, and investor relations.

Kyle obtained a Bachelor of Science degree from Texas State University – San Marcos, where he also played Division 1 Baseball.