Barron’s: “Stock Analysts Are The Most Optimistic In a Decade. It May Be a Good Reason To Sell.”

By datatrekresearch in IN THE NEWS Barron’s: “Stock Analysts Are The Most Optimistic In a Decade. It May Be a Good Reason To Sell.”

Excerpt from Barron's quoting DataTrek co-founder Nick Colas:

.... "Analysts have Buy rankings on 58.2% of companies in the S&P 500 heading into the second quarter, FactSet found. That compares to 36.5% of stocks that rated Hold and just 5.3% deemed Sell. Assuming the rate holds to month’s end, it will mark the highest monthly share of Buy ratings going back to at least 2010, FactSet noted. The five-year average is 55.6%.

For investors, Wall Street’s optimism is a flashing red light, notes DataTrek co-founder Nicholas Colas, who flagged the FactSet report in his newsletter Monday, calling it, “the most disturbing graph we saw this entire weekend.”

Colas points out the last time analysts were this uniformly bullish was in February 2022, when 57.5% of the ratings were Buys. In retrospect, their optimism looks like complacency. While the S&P 500 had delivered double-digit returns the previous two years, inflation was already close to 8%; the Federal Reserve would start hiking interest rates the next month. In the end, the S&P 500 finished down 18% that year.

“It was one of the top 10 worst years since the Great Depression,” Colas said in an interview Monday.

Could the market be in for another gut punch? “That is what the data strongly suggests,” he said"....

Full article here on Barron's.

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