The Markets – February 24, 2025

A difference of opinion.

Broadly speaking, there are two types of investors: individual investors and institutional investors.

Individual investors buy and sell investments to grow their personal wealth. This group of investors often works with financial advisors as they pursue their financial goals. Individual investors tend to invest smaller amounts of money than institutional investors do.

For the last three weeks, sentiment among individual investors has been leaning bearish. Last week, 40.5 percent of investors in the AAII Investor Sentiment Survey were feeling pessimistic about the direction of stocks over the next six months. That was an improvement from the prior week’s reading when 47.3 percent of participants were bearish. Here’s what the survey has found since the week of January 20.

AAII Investor Sentiment Survey results:

The AAII Investor Sentiment Survey is considered a contrarian indicator, meaning that people look at the survey to identify potential turning points in the market. In some instances, when investors have been pessimistic, the market has moved higher, and vice versa, reported Edward Harrison of Bloomberg.

Institutional investors are very large investors, such as banks, mutual funds, exchange traded funds, college endowments, state pensions, insurance companies, and other organizations that buy and sell investments, usually in very large volumes, to meet the goals of the group for whom they’re investing.

Currently, institutional investors are quite bullish. According to survey results released last week by Bank of America (BofA), many institutional investors are fully invested and holding very little cash. “Global stocks have become the most popular asset class with [institutional] investors, who are showing the biggest willingness to take risk in 15 years,” reported Sagarika Jaisinghani of Bloomberg. “About 89 [percent] of respondents in the BofA survey said US equities were overvalued, the most since at least April 2001. The faith in so-called U.S. exceptionalism — where investors bet mainly on American financial markets — has also faltered as investors rotate into European stocks.”

Last week, major U.S. stock indices moved lower on discouraging economic data and inflation concerns, reported Connor Smith of Barron’s. The yield on the benchmark 10-year U.S. Treasury moved lower over the week.

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

LET’S TALK ABOUT THE WEATHER.

Last week, many parts of the United States set new records for low temperatures as an arctic blast swept across the country. Antelope Creek, North Dakota, saw 45 degrees below zero, which made the low in Austin, Texas (29 degrees) seem downright balmy. In many areas, schools closed – not because of snow, but because of the bitter cold. Meanwhile, up in Alaska, the Iditarod dog sled race moved north from Anchorage to Fairbanks due to a lack of snow and too-warm temperatures.

See what you know about historical weather events in the United States by taking this brief quiz:

1. What was the coldest temperature ever recorded in the United States?
   1. 80 degrees below zero in Prospect Creek, Alaska
   2. 70 degrees below zero in Rogers Pass, Montana
   3. 60 degrees below zero in Tower, Minnesota
   4. 45 degrees below zero in Minot, North Dakota
2. In 1974, the U.S. experienced the Super Tornado Outbreak. During the outbreak, two F5 tornadoes struck Tanner, Alabama, in the same 24-hour period. How many tornadoes occurred across the United States during the Outbreak?
   1. 47 across 7 states
   2. 98 across 25 states
   3. 148 across 13 states
   4. 247 across 21 states
3. In the early 1900s, steady rain caused a major river in the U.S. to overflow its banks. The floodwaters spread across 16 million acres in seven states. It “temporarily created a shallow sea over 75 miles wide and forced thousands to be evacuated by boat,” reported Evan Andrews of History.com. What is the name of the river that flooded?
   1. Ohio River
   2. Mississippi River
   3. Colorado River
   4. Platte River
4. In 2011, a massive dust storm encompassed Phoenix, Arizona. The 6,000-foot-high wall of dust stretched more than 100 miles long and traveled 150 miles, reported Gabe Trujillo of Channel 12 News. What are these enormous dust storms called?
   1. Derechos
   2. Lizard stranglers
   3. Haboobs
   4. Drouths

By the end of last week, temperatures were warming up. In some places, temperature swings of 90 degrees or more were anticipated. That’s sure to inspire thoughts of spring blooming!

Weekly Focus – Think About It

“The beautiful spring came; and when Nature resumes her loveliness, the human soul is apt to revive also.”

—Harriet Ann Jacobs, Author

Answers: 1) a; 2) c; 3) b; 4) c

Best regards,

Daniel J. Murphy, CFP®
Murphy Wealth Management Group
60 Merritt Blvd., Suite 106
Fishkill, NY 12524

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