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AAII Sentiment Survey: Optimism Falls to Lowest Level Since the Election

Optimism among individual investors waned, falling to its lowest level since the election, in the latest AAII Sentiment Survey. Both neutral sentiment and pessimism rose.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 6.6 percentage points to 37.0%. Optimism was last lower on November 2, 2016 (23.6%). The historical average is 38.5%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 0.9 percentage points to 30.3%. Neutral sentiment was last higher on December 7, 2016 (30.4%). The rise is not large enough to keep neutral sentiment from remaining below its historical average of 31.0% for the seventh consecutive week and the ninth time in 10 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, jumped 5.7 percentage points to 32.7%. Pessimism was last higher on November 2, 2016 (34.3%). This is also just the second time in 11 weeks that bearish sentiment is above its historical average of 30.5%.

The drop in optimism ends a streak of nine consecutive weeks with bullish sentiment above 40%, the longest such streak since October 15 through December 10, 2014. The decline is occurring as the post-election rally has paused. At current levels, all three sentiment indicators are close to their historical averages.

The potential impact that President-elect Donald Trump could have on the economy is causing uncertainty or concern among some investors, while encouraging others. Also influencing investor sentiment are valuations, earnings, consumer sentiment and the magnitude and timing of future interest rates.

This week’s AAII Sentiment Survey results:

  • Bullish: 37.0%, down 6.6 percentage points
  • Neutral: 30.3%, up 0.9 percentage points
  • Bearish: 32.7%, up 5.7 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.).

Want to weigh in? Take the survey yourself and see results online at http://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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