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Featured Advisor



Kim Butler
President

Partners for Prosperity, Inc.

City:Mt. Enterprise

State: TX



BIOGRAPHY:
I have 20+ years of handling alternative investments in cash, growth and income for clients nationwide.  I strive to help my clients with all things financial in every way possible over the phone and the web.  I own an alpaca farm which I enjoy working during my downtime.  I also enjoy gardening, writing and reading books.  I also train other advisors on Prosperity Economics.

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Miserable Millionaires? Could be a Good Thing, CNBC - June 27, 2012

 

 

GSO Images | Photographer's Choice | Getty Images
 

The fact that millionaires are stuck in a funk might seem like a bad sign for markets and especially for the luxury economy.

 

A new survey from Spectrem Group shows that millionaire investor sentiment is at a five-month low. It’s crashed from a high of 10 (very bullish) in March to just one in June, meaning the rich are basically neutral and headed toward bearish.

This follows a steady stream of indicators that are flashing red for the rich. Their spending is slowing. They’re not putting money into stocks. And their top concerns are the political environment, the national debt and other issues that aren’t likely to be solved anytime soon.

 

All of this would seem to be a bad omen for the economy. After all, the one percent owns about half of the individually held stocks in the U.S., and the top five percent of earners accounts for up to a third of consumer outlays. If they’re cranky, the United States is cranky.

 

High Net Worth | Millionaire Investor Sentiment

 

But there is a possible bright side to the misery of millionaires – and I’m not talking schadenfreude. Maybe a bearish signal from millionaires could mark a market bottom.

If we take a look at the S&P alongside the millionaire investor index we see two things. First, there is a pretty good correlation between the mood of millionaires and the market. Millionaire optimism goes up when markets go up, and it goes down when markets go down.

 

Robert Frank
Robert Frank
CNBC Reporter 
& Editor

 

The second lesson is that lows in millionaire sentiment are often followed by market rallies. The last time we saw maximum bear sentiment from the millionaires was October of 2011. Their pessimism was followed by the huge rally in the S&P, which continued into the early spring.

The previous fall was in the March of 2011, which also preceded a mini rally  in the S&P.

Of course, the predictive effects of the millionaire sentiment don’t always work. Millionaires turned bearish in the spring of 2011, and the market continued to fall even further throughout the summer – along with their sentiment.

Still, the last time millionaires were bearish, the markets followed with a strong rally.

Do you think millionaires are a leading indicator, negative indicator or non-indicator for financial markets?

-By CNBC's Robert Frank

To read the original article, follow link to CNBC