The depressed US consumer
Jun 08, 2022
Historically the University of Michigan Consumer Confidence Index was a solid contrarian indicator of when to invest in the US stock markets. If you invested at the 8 sentiment peaks you made an average 12 month return of 4.1%. On the contrary, if you invested at one of the sentiment troughs you made an average 12 months return of 24.9% ! While it would be a little easy to just extrapolate history to the future and the current environment may be different from what was observed in the past, it is undeniable that we are currently at a trough in consumer sentiment. For the contrarians, this could indeed be a good moment to invest as the consumer could already be more depressed that the long term outlook warrants.