Each year, Franklin Templeton Investments asks 1000 investors whether the S&P went up or down in the previous year. We live in the age of CNBC and Yahoo! Finance and iPhone apps; where no one lacks the data to know a simple statistic like whether the market went up or down. Yet year after year, the survey shows that swarms of investors are utterly clueless.
- In 2010, 66% of investors said the S&P 500 fell in 2009. Yet it was actually up 26.5%
- In 2011, about half of the investors said the market fell in 2010. Yet it was actually up 15%
- In 2012, 53% of investors said the market fell in 2011. Yet it was up 2%
- Just recently, 31% of the investors said the market fell last year. Yet it was up 16%.
Mind –boggling, isn’t it? The problem is that people associate the economy with market returns imagining market performance is related to their own economic confidence or linked to their own desire to invest.
The bottom line is that the current economy does not reflect what “Mr. Market” is doing. The market is forward looking and investors base their opinions using a rear view mirror.