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AAII Sentiment Survey: Pessimism Jumps to a Three-Month High

The proportion of individual investors who anticipate a decline in stock prices is at a three-month high, according to the latest AAII Sentiment Survey. Optimism, conversely, fell sharply after having reached an eight-month high last week.

Bullish sentiment, expectations that stock prices will rise over the next six months, plunged 15.1 percentage points to 30.6%. Optimism was last lower on August 1, 2018. The drop more than reverses last week’s gain and puts bullish sentiment back 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 4.7 percentage points to 33.9%. Neutral sentiment is above its historical average of 31.0% for the 32nd time in the past 34 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, jumped 10.3 percentage points to 35.5%. Pessimism was last higher on July 4, 2018 (39.3%). Pessimism is above its historical average of 30.5% for the fourth time in five weeks.

At current levels, all three indicators are within their typical historical ranges. A bullish sentiment reading below 28.1% would be unusually low.

The majority of this week’s responses were recorded before yesterday’s drop. The survey period runs from Thursday through Wednesday with reminders to participate sent to a rotating group of AAII members every Monday.

Tariffs and the possibility of an escalating trade war remain front and center on the minds of many individual investors. Also influencing sentiment are Washington politics (including President Donald Trump), midterm elections, economic growth, valuations and corporate profits. Some AAII members have been anticipating a decline in stock prices; whether the recent pullback is steep enough to prompt them to act remains to be seen.

This week’s AAII Sentiment Survey results:

  • Bullish: 30.6%, down 15.1 percentage points
  • Neutral: 33.9%, up 4.7 percentage points
  • Bearish: 35.5%, up 10.3 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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