Market Pulse: The Patient's Panicking, But Better Times Ahead

Michael Kasper discusses the Market Pulse Index, which quantifies market sentiment using six factors. The index ranges from 0 (panic) to 1 (manic), with a recent low reading indicating panic. Historically, such panic signals have led to higher equity returns and small cap outperformance. Despite structural shifts in the economy, historical signals have consistently indicated better times following panic periods.

Discuss the historical performance of the Russell 3000 following panic signals.

How do structural shifts in the economy affect the reliability of historical signals?