A contrarian indicator

NFIB Small Business Optimism Index

Because of the importance of small businesses to the job-creation and growth dynamics of the US economy, investors often consider current small-business sentiment as a proxy for where the market should reside. In reality, a low level of small-business optimism has signaled a favorable market environment for investors. Conversely, high levels of optimism, as witnessed in the 2005-to-2007 time period, should raise investors’ caution. Current weak sentiment supports a constructive view for US equities.

Dave Daglio, The Boston Company Asset Management

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