Investors Intelligence Ratio: Historical High?

Tuesday, 10 Dec 2013 07:14 AM

By Rick Pendergraft

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After the extremely high reading on the Investors Intelligence Ratio from two weeks ago, I started trying to find more historical data. I wasn't able to find the exact all-time high on the ratio, but I did find some interesting information.

First, the ratio rose again last week, as the bullish percentage jumped to 57.1 percent and the bearish percentage fell to 14.3 percent.

This puts the ratio at 3.99.

I tried to find out if the ratio has ever been over 4.0, but could not find a definitive answer to that question.

What I did find is that last week's reading is the highest reading in the last 14 years.

One other item I found of interest is that the ratio stood at 3.48 in August 1987.

To summarize the stats above, the current reading is higher than it was before the bear markets of 2000 and 2007, and it is higher than it was before the crash of 1987.

If this isn't enough to cause investors to take action to protect their portfolio, I don't know what will.

I am not saying investors should dump all of their equity holdings today, but I do think it would prudent to make adjustments to your asset allocation percentages.

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