Picture du Jour: Citi’s “Panic-Euphoria Model” screams BUY

By Prieur du Plessis, on October 6th, 2011 posted in: Investment, Stocks Leave your comment

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With many investors lately having become extremely nervous about stock markets, Citigroup strategist Tobias Levkovich argues that the all-out panic actually presents a great buying opportunity for investors.

“The proprietary Panic/Euphoria Model has been in panic territory since August 19th and the level generates a near 90% chance of higher equity prices in six months and a 97% probability of teen-like gains in the next 12 months (see Figure),” said Levkovich (via Business Insider). Back in 2000 and 2008, there were indications of euphoria; not dour sentiment. Furthermore, the significant disavowal of equities as an investment asset class by the general public is obvious given the large US stock mutual fund withdrawals. Such a trend sends a fairly clear contrarian message of opportunity.”

Source: Business Insider – Money Game, October 4, 2011.

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