Sentiment matters to markets – but how can you tell what investors are thinking?

Markets are driven to a large extent by “feelings” – investors getting overly excited or gloomy about a particular sector. But how do you measure that? John Stepek looks at one of the best sentiment indicators there is.

Happy stockbrokers
Markets are driven by human feelings
(Image credit: © Corbis via Getty Images)

This week, Bank of America released my favourite sentiment survey. It’s the monthly survey of what global fund managers are buying, selling, and thinking.

It’s useful because it gives you an idea of where the world’s money managers are putting their cash. You’ll often find that you can profit by doing the exact opposite.

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John Stepek

John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.