There are many stats you could cite to indicate that equity markets may be due for a pullback—eight straight years of positive returns, PE ratios that have reached their highest levels since before the financial crisis, etc.
Now there is one more indicator that you can add to the list: investment newsletter sentiment.
On Feb. 9, The Wall Street Journal reported that the percentage of investment newsletters with a bullish tone about the stock market rose to 62.7%, the highest level since 2004. Investors Intelligence surveys more than 100 writers of investment newsletters each week as part of its Sentiment Index, according to the WSJ.
As someone who ghostwrites quite a few newsletters on behalf of portfolio managers, I can attest that there has been a lot of “cautious optimism” conveyed in client communications lately. But should the fact that there is widespread optimism shape how you approach your newsletter?
My advice to portfolio managers and financial advisors is to not be swayed by what other firms are writing in their newsletters. When it comes to finding the right perspective for the market commentary section of a newsletter, my three biggest pieces of advice are:
- Don’t try to “follow the herd”
- Don’t go out of your way to be contrarian
- Give your honest opinion
Instead of getting wrapped up in thinking about what other firms are writing, focus on providing your assessment of where you think markets are headed. Your clients want to hear your honest opinion, not a version of your opinion that is shaped by what your competitors are saying.
If you’re looking for more advice about how to improve your newsletter, you can download our free e-book: The Five Things You Need to Publish an Investment-Grade Newsletter.
About the Author
Scott Wentworth is the founder and head writer at Wentworth Financial Communications. WFC helps firms across the financial services industry create investment-grade newsletters, white papers, blogs, and other forms of thought leadership. As a die-hard St. Louis Cardinals fan who lives on the North Side of Chicago, Scott knows all about being a contrarian.