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AAII Sentiment Survey: Optimism Rises to a 6-Week High

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Optimism among individual investors is starting 2017 at a six-week high, according to the latest AAII Sentiment Survey. The rise in optimism comes as both neutral and bearish sentiment declined modestly.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 0.6 percentage points to 46.2%. Optimism was last higher on November 23, 2016 (49.9%). The rise keeps bullish sentiment above 40% for an eighth consecutive week and above its historical average of 38.5% for a ninth consecutive week.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, declined 0.1 percentage points to 28.6%. This is the fifth consecutive week and the seventh time in eight weeks that neutral sentiment is below its historical average of 31.0%.

Bearish sentiment, expectations that stock prices will fall over the next six months, declined 0.5 percentage points to 25.2%. This is a five-week low; pessimism was last lower on November 30, 2016 (25.1%). The decline also keeps bearish sentiment below its historical average of 30.5% for the eighth time in nine weeks.

All three sentiment measures are starting the new year within their typical historical ranges. The optimism shared by many, but not all, investors extends a shift in expectations that started the week of the November election.

The potential impact that President-elect Donald Trump could have on the economy is encouraging some individual investors and creating uncertainty or concern among 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 readings:

  • Bullish: 46.2%, up 0.6 percentage points
  • Neutral: 28.6%, down 0.1 percentage points
  • Bearish: 25.2%, down 0.5 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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