By Tom Bradley

We write a lot in this space about investor sentiment. Art Phillips, the founder of Phillips, Hager & North, taught me to pay attention to the mood of other investors. Like every tool, sentiment is not a failsafe indicator, nor is it a precise timing tool. It is, however, a good check against getting too carried away in one direction or another. If everyone is bullish, it’s time to get more cautious. Everyone else knows the good news too. If the consensus is firmly in the bearish camp, it’s time to focus the research efforts (and trading tickets) on the buy side.

The Canadian Couch Potato posted a good piece this week on where investor sentiment is today. He referred to a survey of 200 institutional money managers carried out by Morgan Stanley. The managers were asked, “What best describes your attitude to global stocks right now?” The results showed that they were pretty evenly divided across four distinct categories:

• “I’m buying stocks now” (20%)
• “I’m waiting for an entry point after the policymakers get their act together” (30%)
• “I’m continuing to sell” (25%)
• “I’m confused” (25%)

I don’t know where this mishmash would come out on Art’s sentiment indicators, but it’s cautious and confused enough to tell me that it’s a better time to buy than sell.