One of the mantras of a Sage Investor is to buy when people are selling and sell when people are buying. While we spend most of our time analyzing the nuts and bolts of companies, we are also scanning the media and investment landscape seeking Consensus. In our First Generation AKR blog, we attempted to identify certain moments of Consensus in the stock market and economy.
What is Consensus? Consensus can take on many forms. It can be a group of Analysts or Strategists (we call them Soothsayers) that are all making the same predictions on a stock or the general economy . It can be the media, touting the latest trend or "must have" product. The front page or cover story of most magazines and newspapers are essentially consensus points of views.
Why is Consensus Important? Unfortunately, the problem with consensus is that is often inverse in value, meaning when the Soothsayers say oil is going to $80 barrel, more times than not, it goes the other direction. Consensus is contrarian and if understood for what it is, it can be very lucrative for investors. Consensus can represent a peak or bottom of a business cycle.
For the average investor who doesn't have time to follow the neuroticism of the markets, following the Consensus, is often the easiest thing to do, but more often than not, following the Consensus can be very unprofitable.
|Consensus Watch Postings For Last 90 Days|
|Negative Consensus Postings (Bull Mkt Indicator)||Positive Consensus Postings (Bear Mkt Indicator)|
FEAR AND GREED CONSENSUS: Reality Check Hits Stocks
FEAR AND GREED CONSENSUS: Storm passes, stocks resume ascent
LEVERAGE CONSENSUS: Margin debt at near all-time high (May-06 2013)
MAGAZINE COVER CONSENSUS: Barons calls for Dow 16,000 (Apr-23 2013)
GRIDLOCK CONSENSUS: Honk if economy is growing (Mar-27 2013)
FEAR AND GREED CONSENSUS: Stocks continue to ride the wave (Mar-22 2013)
HOLLYWOOD CONSENSUS: Celebs and stocks getting ready for their close up (Mar-19 2013)
MEDIA CONSENSUS: Leading off the evening news…stocks! (Mar-07 2013)
REPO MAN CONSENSUS: Consumers Meeting Their Obligations (Feb-19 2013)
FEAR AND GREED CONSENSUS: The Great Rotation In Full Effect (Feb-19 2013)