Before I get to that, let me explain what the Big Number is, and why it’s an incredibly important money-making idea…

In early 2000, the Big Number “called the top.” It hit its all-time high (based on more than 50 years of data) in January 2000, two months before the dot-com peak in March 2000. That was the end of one of the greatest stock-market booms in history…

The boom started in August 1982. If you had invested $10,000 in stocks in 1982, it would have been worth nearly $200,000 18 years later at the stock-market peak.

The Big Number called the beginning of this great bull market, too… It hit the second-lowest level we’ve seen in the last 26 years just a few months before the stock market bottomed in 1982.

But that was the second-lowest level in the last 26 years. When was the lowest level? Right now.

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As of this weekend, the Big Number just went lower than its lows in 1982. To me, it’s a strongly bullish sign for the stock market.

The Big Number is a simple indicator: It’s consumer confidence.

And it’s easy to use:

You don’t want to be a big buyer of stocks when consumer confidence is extremely high.

Consumer confidence has only been close to its 2000 high once… and that was in 1965. Guess what? The stock market peaked soon after. The pain that followed was terrible… Adjusted for inflation, stock prices didn’t beat their late 1960s highs until the 1990s. It took an entire generation!

But you do want to start buying when consumer confidence gets extremely low.

Consumer confidence has only been as low as it is now a few times in history.

When People Are Worried, BUY STOCKS!

The case of 1982 is clear… It was the beginning of the great boom in stocks. Same story in late 1990… Consumer sentiment called the only major low during the 1990’s great bull market.

Consumer confidence bottomed a couple other times as well… in 1975 and 1980. Stocks rallied after both of those bottoms.

It’s not a perfect indicator… Its timing is not spot-on. But I would much rather be a buyer of stocks closer to now, when consumer confidence is near record lows, than back in 2000, when consumer confidence was at record highs.

The keys to this indicator are the extremes. When it’s at its extremes, consumer confidence has proven to be an early warning that a dramatic change in trend is about to happen. And right now, we’re at an extreme…

If it’s right again, we could be on the brink of another great bull market in stocks. So be worried about the economy if you want. That’s fine. But don’t be worried so much about the stock market…

We just got great news: Consumer confidence is terrible! Stocks are much closer to a “buy” than a “sell.”

Good investing,

Steve

Source: This Indicator Has Great News About Stocks