They say nobody rings a bell at the top of the market. But sometimes… Mom calls.
My mother is the epitome of the public investor – which makes her an outstanding contrary indicator.
She doesn’t pay particularly close attention to the financial markets. Sure, she listens to the news. She can tell you if stocks, in general, are trending higher or lower. But, she’s not exactly glued to CNBC all day, focused on every blip on the financial radar screen.
So, when mom decides it’s time to buy or sell stocks (or gold, or oil, or cattle futures), it’s because the idea has gone “mainstream.” Her hairdresser is talking about it. The ladies in her bridge club are discussing it. The topic has probably come up at her church choir practice.
And whatever she wants to do is usually a bad idea.
I discovered the “Mother Indicator” in July of 1987. For most of the four previous years, I had been encouraging my folks to invest in the stock market. And, they resisted.
Then, just as the market was getting frothy and I was starting to turn bearish, Mom called and said she wanted to put some money to work in the stock market.
I figured that was probably NOT a good sign. So I started encouraging my clients to raise cash and maybe even start building short positions.
Three months later, the stock market crashed, and I realized just how powerful this indicator was.
Signals from the Mother Indicator don’t occur very often – just once about every two years or so. But, they are remarkably accurate. And, they always seem to occur within days of important turning points.
So today, with the stock market popping to new all-time highs, with gold and silver racing higher, with interest rates dropping to the lowest level in almost three years, and with cryptocurrencies rising up from the dead… Wouldn’t you like to know what Mom thinks?
That’s why I was thrilled when Mom called me yesterday morning.
I’ll tell you about that conversation in Monday’s Market Minute essay.
Best regards and good trading,
Do you use a “Mother Indicator”? How do you know when it’s time to get out of stocks and into cash?
Let us know, along with any other trading stories, questions, or suggestions at [email protected].
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