AAII Sentiment Survey: Neutral Sentiment Stays Above 40%


The percentage of individual investors describing their short-term outlook for stocks as “neutral” stayed above 40% for a second consecutive week in the AAII Sentiment Survey. The latest results show a further decline in optimism and rise in pessimism.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 3.1 percentage points to 31.5%. The drop keeps optimism below its historical average of 38.5% for the fourth time in five weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 1.2 percentage points to 41.6%. This is a 10-week high. Neutral sentiment is above its historical average of 31.0% for the 22nd time in 23 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 2.0 percentage points to 26.9%. Even with the increase, pessimism is below its historical average of 30.5% for the 13th time in 15 weeks.

At its current level, neutral sentiment is at an unusually high level. The cutoff between a typical and unusually high reading is 40.0% (one standard deviation above average).

Most of this week’s results, including the responses to the special question, were tabulated before yesterday’s agreement between President Trump and European Commission President Jean-Claude Juncker to postpone implementing any new tariffs while negotiating trade policies. In response to a separate survey conducted last week, the overwhelming majority of AAII members said they have not altered their portfolios in anticipation of an all-out trade war occurring between the U.S. and China.

This week’s special question asked AAII members what factors were most influencing their six-month outlook for stocks. More than a quarter of all respondents (28%) say tariffs and the possibility of a trade war. Politics were close behind, with 19% of respondents specifically mentioning President Trump and an additional 7% listing the political environment and/or the November elections. Nearly 17% of respondents say economic growth, while 11% pointed toward interest rates. Also mentioned were valuations, corporate profits and the length of the current bull market. Some respondents listed more than one factor.

This week’s AAII Sentiment Survey results:

  • Bullish: 31.5%, down 3.1 percentage points
  • Neutral: 41.6%, up 1.2 percentage points
  • Bearish: 26.9%, up 2.0 percentage points

Historical averages:

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

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey.

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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