Put-Call Ratio

It's yet another potentially meaningless index or metric that investors use to guage market sentiment. Like...if you found that there were a ton more puts out there then calls (i.e. investors being long the put or long the call), then it'd mean that market sentiment was bearish. If you own a put, you're betting the market is going down. And a call is...yeah, the opposite. So if there were an even number of puts and calls out there, then the market is probably...balanced.

The problem? The sentiment indicators don't really work. They sort of correlate over time with the data if you look in the rear view mirror in just the right way. But you're viewing them in a rear view mirror, meaning that things already happened. So it's hard to then make investing bets based on what the real-time data is giving you.

Our suggestion: crystal balls.