Investor Sentiment Hits a Crossroads

Keir

Alright folks, we’re back—Zero to Tenbagger, still unsponsored, still a little cranky, and still fighting the retail investor’s fight. So, let’s get right into what everyone’s feeling but maybe not saying out loud: investor sentiment is wobbly. Like, seriously wobbly. The latest Sentiment Survey just dropped, and, oof, bullish sentiment clocked in at 31.6%. That’s way below the long-run average. Meanwhile, bearish sentiment shot up to 49%. Nearly half of individual investors think stocks are going down in the next six months. That’s—well, that’s a very crowded corner. Neutral sentiment has been taking a nosedive too. It dipped to just over 19%, well below its norm, which tells me there’s not a lot of fence-sitters left. Everyone’s picked a side, and most picked “yikes.” And the bull-bear spread is sitting at -17.5%, which, I mean, if you look back at the charts, tends to be where things get interesting.

Keir

It’s not just the data, though. If you’ve been doom-scrolling headlines lately—and hey, we all do it—you’ve seen the drumbeat of bad news. US economic optimism has pretty much fallen off a cliff for November. There’s this broad feeling of unease, even as the big dogs—Nvidia, Amazon, whatever—post surprisingly strong numbers. It’s that weird split: solid earnings but lousy vibes. Honestly, it kind of reminds me of late 2018. Back then, we were spooked by aggressive Fed hikes, the Trump-Xi trade spat, slowing global growth, and every second headline was about tech getting hauled in front of Congress. Déjà vu, right? I’m not saying this is a carbon copy, but the cocktail of reasons to “sit this one out”—it’s all very familiar.

Keir

Maybe some of you remember, we talked about sentiment signals in a past episode—the invisible ways management and markets try to push us one way or the other. Right now, though, it’s retail that’s setting the tone. And, to me, when retail throws in the towel this hard—especially when the actual numbers aren’t as dire as the mood—that usually means we’re at a crossroads. The question, as always, is, what are you gonna do about it?

Keir

Let’s talk about the mess under the hood. If you watched the S&P 500 or Nasdaq this week—well, it’s whiplash city. We had these big, early rallies on strong Nvidia earnings. Everybody’s thinking, “AI is back, the rally is back, let’s go get some rocket emojis.” By lunchtime? Every gain’s given back. The market’s just as happy to climb a wall of worry as it is to tumble off the other side. And what’s fueling this? It’s not just something new, it’s the same old—are rates not going down? Is inflation sticky? Are tech valuations nuts? All that, and then another round of headlines drop—maybe there’s some speculation about an AI bubble. It’s so, so easy to get caught up in the minute-by-minute narrative.

Keir

But this is where I have to own up to one of the classic blunders, and maybe you’ve done this too—back in my microcap days, I’d panic on noise. Headline would hit, I’d sell something I believed in, only to watch it rip higher two weeks later when everyone realized earnings weren’t actually the end of the world. I’m not saying ignore the risks—we’ve all seen how hype cycles work, especially in microcaps or with those so-called “story” stocks—but the pain from letting emotion run the show… yeah. Been there. In fact, if you listened to our episode on red flags, you’ll know how easy it is to see ghosts everywhere in these markets. But a market where the bull-bear spread is this negative historically sets up, not for more pain, but—eventually—a snapback.

Keir

The quiet truth is: when sentiment is off a cliff and the news flow sounds like the end times, that’s when the pros start poking around for value. And I don’t mean the kind of “value” that’s just a discount on yet another vaporware tech company—I mean real businesses, real catalysts, but caught up in the crossfire. If you look back, just about every major market reversal starts when things feel absolutely the gloomiest. I know I’m probably repeating myself, but I feel like, if you’re listening to this show, you probably want that reminder more than something you’ll hear on CNBC.

Keir

So this brings me to what actually matters right now—because all this negative sentiment, all this forced selling, it’s about to become your opportunity window. It’s tax-loss season, which, for people who’ve never seen it up close, is that time when everyone wants to dump their stinkers so they can write off the pain before the books close for the year. It doesn’t mean these companies are bad, a lot of the time. Sometimes it’s just people tidying up portfolios. This is classic forced selling, not fundamental-driven selling. That’s your chance, if you know what to look for.

Keir

Here’s what I like to do, and this isn’t theoretical—this is what’s helped me dig myself out of a few regrettable trades over the years. I start building a buy list of names that have real assets, real businesses, but just got caught in the “everything must go” parade. Then I hunt for what I call the “tax-loss victims”—stocks that look absolutely wrecked but, when you check under the hood, nothing fundamental’s changed. That’s where opportunity hides. If they’ve got actual catalysts on the horizon—drill results, regulatory approvals, a contract in Q1 or Q2—flag those.

Keir

And then, patience. I watch how the tape trades over the next few weeks, wait for liquidity to dry up, and, yeah, when it looks like there’s tumbleweeds in the order book, that’s when the best bottoms form—the Santa Claus Rally is almost always fueled by exhaustion, not euphoria. I’m not promising magic, and I’m definitely not saying you just buy every loser and hope for a miracle. But terrible sentiment has a habit of sowing the seeds for serious returns—if, and it’s a big if, you can keep your head while everyone else is glued to Powell’s every breath.

Keir

So, here’s the homework: get that watchlist together, be ready to pounce once the forced sellers are done and the volume’s dried up, and above all, don’t let panic write your script. This season—tax-loss, exhaustion, Santa Claus Rally—it’s where the next batch of tenbaggers quietly bottoms out, long before the herd even notices. Stay patient, play contrarian, and I’ll see you next time. And hey—if you spot a bargain, maybe keep it to yourself for a bit.