Objective research to aid investing decisions
Login Join
Value Investing Strategy (Strategy Overview)
Allocations for February 2026 (Final)
Cash TLT LQD SPY
Momentum Investing Strategy (Strategy Overview)
Allocations for February 2026 (Final)
1st ETF 2nd ETF 3rd ETF

Dumb Money Confidence as a Stock Market Return Predictor

Steve LeCompte | | Posted in: Sentiment Indicators

A subscriber suggested testing SentimenTrader's Dumb Money Confidence model "that incorporates more than a dozen indicators that have a track record of cycling to extremes, and equating with ebbs and flows in sentiment among broad categories of investors." To investigate, we transcribe monthly values of Dumb Money Confidence from the chart at the link and relate this series to monthly SPDR S&P 500 ETF Trust (SPY) total returns, calculated from the open on the first trading day after a Dumb Money Confidence date to the open on the first trading day after the next Dumb Money Confidence date. Using the specified data from the end of December 1998 (limited by the Dumb Money Confidence series) through the end of July 2022, we find that:

Subscribe to Keep Reading

Get the research edge serious investors rely on.

  • 1,200+ research articles
  • Monthly strategy signals
  • 20+ years of backtested analysis
$17.99 /month

Cancel anytime

Subscribe Now

Further Reading

Sentiment Indicators Consumer Sentiment and Stock Market Returns Business media and expert commentators sometimes cite the monthly University of Michigan Consumer Sentiment Index as an indicator... Technical Trading Applying Machine Learning to Recent Daily Returns Do recent daily returns for a stock reliably predict its near-term performance? In their January 2026 paper entitled... Investing Expertise, Sentiment Indicators Grok Sentiment Index? Can Grok extract a useful weekly U.S. stock market sentiment metric from posts on X? To investigate, we... Equity Premium, Sentiment Indicators, Volatility Effects Goldman Sachs Panic Index Proxy In response to our inquiry about Goldman Sachs Panic Index data, Grok responded that the data are proprietary... Sentiment Indicators AAII Investor Sentiment as a Stock Market Indicator Is conventional wisdom that aggregate retail investor sentiment is a contrary indicator of future stock market return correct?... Calendar Effects, Momentum Investing Stock Market Continuation and Reversal Months? Are some calendar months more likely to exhibit stock market continuation or reversal than others, perhaps due to...