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AAII Sentiment Survey: Neutral Sentiment Falls to a Five-Week Low

The percentage of individual investors describing their six-month outlook for stocks as “neutral” is at a five-week low. The latest AAII Sentiment Survey also shows increases in both optimism and pessimism.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 0.9 percentage points to 36.9%. Even with the increase, optimism remains below its historical average of 38.5% for a fourth consecutive week. Year to date, optimism has been below its historical average on 40 out of 49 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, fell 3.5 percentage points to 28.9%. Neutral sentiment was last lower on November 1, 2017 (26.4%). The historical average is 31.0%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 2.6 percentage points to 34.2%. Pessimism is above its historical average of 30.5% for the third time in four weeks.

Our surveys of individual investors show that most are not currently making investment decisions based on the pending tax legislation. While some of our members are optimistic about the prospects of tax reform being passed, about 40% of those polled in a different weekly AAII survey said the proposed legislation could hurt them. Most of the recent calls into our office about the legislation have pertained to the proposal requiring the use of first-in, first-out accounting for calculating capital gains on sales of stocks. All of those calls have been against the clause included in the Senate’s version of the Tax Cuts and Jobs Act.

While this year’s highs for the major U.S. stock indexes reaching into record territory has encouraged some individual investors, many others have expressed concerns about the possibility of a pullback or a more severe drop occurring. Also affecting investor sentiment are earnings growth, economic growth, valuations and the lack of volatility. Washington politics remain at the forefront of many individual investors’ minds.

This week’s AAII Sentiment Survey results:

  • Bullish: 36.9%, up 0.9 percentage points
  • Neutral: 28.9%, down 3.5 percentage points
  • Bearish: 34.2%, up 2.6 percentage points

Historical averages:

  • Bullish: 38.5%
  • Neutral: 31.0%
  • Bearish: 30.5%

Want to weigh in? Take the survey yourself and see results online at www.aaii.com/sentimentsurvey.

If you want to become an effective manager of your own assets and achieve your financial goals, consider a risk-free 30-day Trial AAII Membership

 

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