by Gary Alexander
April 29, 2025
“Be fearful when others are greedy and be greedy when others are fearful.”
– Warren Buffett
Investor sentiment is way down since late February – and that’s great news (to us contrarians).
Today is Donald Trump’s 100th day in office. It certainly has been a wild ride, but is it profitable? No, not yet. Will it reward us later on? That’s a smarter question. First, let’s review those 100 days of swings in sentiment. In the week when Donald Trump took the oath of office, the percentage of negative bears in the weekly American Association of Individual Investors (AAII) was only 29.4% (table, below), but:
- Five weeks later, the percentage of bears was up to 60.6%, with only 19.4% bulls, a 3+-to-1 ratio.
- 10-weeks after Trump’s Inauguration, the percentage of bears reached a two-year high of 61.9%.
- This is unusual. The historical AAII average is 37.5% bullish, 31.0% bears and 31.5% neutral.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Bear in mind that these surveys are taken over a week’s time frame, so the most recent April 23 poll is taken from midnight at the start of Thursday, April 17 to midnight at the end of April 23, so it reflected investors’ moods during a generally rising market, but these investors are still suspicious of this recovery.
In the latest AAII poll, investors were asked: “How has your sentiment toward the stock market changed since the start of the year?” The majority were bearish, and over 80% were at least “more cautious”:
The S&P has obviously been extremely volatile in Trump’s first 100-days, as reflected in these wide poll swings. The S&P first meandered up 6% from January 10 to an all-time high on February 19, then it fell 21.3% to its post-Liberation Day “tariff tantrum” low on April 7th, followed by a +14.3% recovery as of Friday, April 25. In this poll, the widest bear/bull spread (3.12 to 1) came in the first week of its decline, February 20-26. Bear in mind that these are sophisticated private investors – those who follow the markets daily, so their answers reflect the mood of that segment of the private market likely to trade stocks – not those who focus on other interests – a real life – and tend to let their portfolios rise or fall.
Is the AAII survey a contrary indicator? In market extremes, the historic answer seems to be yes. In the worst market disaster of this century, the Great Financial Crisis of 2008, the number of bearish investors in the survey spiked above 60% in the final months of that crash, when stocks plunged about 30% from mid-October 2008 to mid-March 2009 – but then stocks soared by over 60% in the next 12-months.
Extreme Magazine Covers Are Also a Great Contrarian Indicator
Extreme magazine covers are a more popular and obvious indicator of contrarian mass delusions.
Ever since Business Week’s cover, “The Death of Equities,” in 1979 – published right before a decade of massive stock gains in the 1980s – extreme magazine covers have been noted for reflecting the mood of the mob at its extreme levels of maximum pessimism at market bottoms, or euphoria near market peaks.
The 2008 Financial Crisis was born out of a long-developing real estate bubble, which built from the late 1990s to a peak in 2005, fueled by kinky derivatives of various “tranches” of real estate debt, much of it rated “AAA” when those debts were in fact based on very shaky credit risks encouraged by politicians wanting every American to participate in the Great American Dream of owning their own home, whether they could afford it or not. Many buyers signed on for adjustable-rate mortgages (ARMs). As rates rose in the 2001-05 Fed rate-raising cycle, many found themselves facing crippling monthly payments, so they began walking away from their homes, leaving banks holding their keys and their bloated mortgages.
Here are two TIME covers which straddled that crisis – the first from 2005, near the peak of the real estate bubble, and the second heralding the collapse of the stock market the day it bottomed out in 2009:
Personally, we sold our Virginia home “too soon” in 2004, but better too soon than too late. Our friends who sold later couldn’t find buyers in 2006 and beyond. As the chart (below) shows, the 2005 situation in real estate markets – as reflected in the Case-Shiller index – was that home prices were already over-inflated and near their peak, so these 2005 TIME covers reflect mob bias, not truth. They mirrored group ignorance, not factual content. Their true intent was to sell more issues to satisfy or attract advertisers, so their goal was to reflect the fears of the masses most accurately, not to report the news more accurately.
Here is a time map of the true situation in real estate and stocks on the date those covers were published:
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
The Wall Street Journal was also fooled. On March 9, 2009, the day the stock market turned around, the Wall Street Journal asked, “Just how low can stocks go?” The Dow Jones Industrials had just fallen below 7,000 for the first time in 12-years, and the S&P 500 was below 700 for the first time since 1996. Goldman Sachs warned that the S&P could fall as low as 400, so the Journal asked, “Dow 5000? There’s a Case for That.” But the chart above showed the Dow gained 66% to reach 11,000 by April 2010.
The Strange Case of Five Straight Negative Covers in The Economist (April 2025)
Now we turn to the current market and the 2025 outlook. Reflecting the negative AAII polls, we see four or five negative covers on Donald Trump’s handling of the economy (five, if you count Elon Musk).
Here are all four April 2025 Economist covers and their key editorial summaries from their inside pages:
This negative string of covers could go back further, to March 29, if you include another wounded eagle – this time under the Musk name – and then to an early March cover picturing Trump as a dollar arsonist.
Why is this important?
According to Wikipedia, Gregory Marks and Brent Donnelly of Citigroup examined covers of the British magazine The Economist and “selected 44-cover images from between 1998 and 2016 that seemed to make an optimistic or pessimistic point.” Their survey found that 30 of the 44-covers (68%) turned out to be contrarian – pointing in the opposite direction – after one year. If this study has any merit, then it looks like the market in the rest of 2025 and early 2026 could stage a recovery, since the last five Economist covers have been almost comically anti-Trump, fully laden with doomsday rhetoric about the dollar, stocks, bonds, the economy, government spending cuts under DOGE and U.S. leadership – all failing.
Sometimes bad news is good news, especially when the bad news seems so extreme and all-pervasive.
We should also bear in mind that The Economist has been edited by an anti-Trump zealot for 10-years, since February 2015, right before Trump first declared his candidacy, and her covers and editorials have been consistently against Trump’s policies for a decade, as in this comic art cover from September 2015:
But the Dow had different ideas after Trump’s first victory – and we may turn out OK in Trump 2.0, too:
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
All content above represents the opinion of Gary Alexander of Navellier & Associates, Inc.
Also In This Issue
A Look Ahead by Louis Navellier
Tariffs Are Melting Away, But China Remains Stubborn
Income Mail by Bryan Perry
The Fed Should Act Next Week, With a Preemptive Rate Cut
Growth Mail by Gary Alexander
Downbeat Sentiment (and Magazine Covers) are Contrarian Buy Signals
Global Mail by Ivan Martchev
The Stock Market is Sniffing Out More Trade Deals
Sector Spotlight by Jason Bodner
Survival Techniques in a Confusing Market Year
View Full Archive
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About The Author
Gary Alexander
SENIOR EDITOR
Gary Alexander has been Senior Writer at Navellier since 2009. He edits Navellier’s weekly Marketmail and writes a weekly Growth Mail column, in which he uses market history to support the case for growth stocks. For the previous 20 years before joining Navellier, he was Senior Executive Editor at InvestorPlace Media (formerly Phillips Publishing), where he worked with several leading investment analysts, including Louis Navellier (since 1997), helping launch Louis Navellier’s Blue Chip Growth and Global Growth newsletters.
Prior to that, Gary edited Wealth Magazine and Gold Newsletter and wrote various investment research reports for Jefferson Financial in New Orleans in the 1980s. He began his financial newsletter career with KCI Communications in 1980, where he served as consulting editor for Personal Finance newsletter while serving as general manager of KCI’s Alexandria House book division. Before that, he covered the economics beat for news magazines. All content of “Growth Mail” represents the opinion of Gary Alexander
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