AAII's Rotblut: Bearish investors usually get it wrong

Money Life with Chuck Jaffe

Charles Rotblut, editor of the AAII Journal -- Money Life's all-time leader in guest appearances, but also the person responsible for maintaining the American Association of Individual Investors' sentiment survey -- says that investor optimism over the last three weeks has reached some of the lowest levels seen since the group started its survey in 1987. Rotblut says that when optimism is unusually low, "you tend to see outperformance in the Standard & Poor's 500 over the following six months and 12 months. ... When people are too negative, it's usually a good time to get greedy." But in the Market Call, Stephen McKee of the No-Load Mutual Fund Selection & Timing newsletter says that he still sees too much bullish sentiment and that he doesn't think the market will turn around until investors get negative; until that happens -- and for many months now -- McKee and his newsletter have been bearish. Also on the show, Greg McBride, chief financial analyst for BankRate.com discusses the Federal Reserve's upcoming rate hike and how higher interest rates and rising inflation will affect savers and borrowers in the years ahead.