Investor Optimism Rising, Sort Of

By Douglas A. McIntyre Published Dec 21, 9:35AM EST

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Investor optimism gained slightly in December rising 6 points to a level of 50 according to the UBS/Gallup Index of Investor Optimism. Most surveys refer to this as "investor sentiment" on their reports. That rise might sound OK until the next data point.

The report says that this is the second lowest level for the Index this year and is 40 points below that of December 2006. The Index is conducted monthly and had a baseline score of 124 when it was established in October 1996.

Here are the details: Most of the improvement in December’s Index can be found in the Economic Dimension of the Index, which measures investors’ feelings about the direction of the overall US economy. The Economic Dimension increased 5 points from -12 in November to -7 in December. Despite this uptick, 78 percent of investors describe the current U.S. economy as being in a slowdown or recession – essentially unchanged from the 79% who felt this way in November and up from 68 percent who felt this way in October. Investor sentiment towards their own investments remained basically unchanged with the Personal Dimension of the Index, which measures Investors’ optimism about their individual investment portfolios, increasing 1 point to 57 from its level of 56 in November.

The real truth about sentiment is that most traders use this as a "fade the trade" so the want to sell when sentiment is too high and they want to buy when sentiment is too low.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.