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AAII Sentiment Survey: Pessimism Reaches a Post-Election High

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Pessimism among individual investors about the short-term direction of stock prices is at its highest level in more than four months. At the same time, optimism is near, though slightly below, its long-term average. The survey period runs from Thursday through Wednesday. Most of the votes were recorded before yesterday, when the Dow Jones industrial average rose above 21,000.

Bullish sentiment, expectations that stock prices will rise over the next six months, declined 0.6 percentage points to 37.9%. The modest decrease follows what had been a six-week high. The historical average is 38.5%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, fell 2.8 percentage points to 26.5%. Neutral sentiment was last lower on December 21, 2016 (26.2%). The historical average is 31.0%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 3.3 percentage points to 35.6%. Pessimism was last higher on October 19, 2016. The increase keeps bearish sentiment above its historical average of 30.5% for the sixth time in seven weeks.

All three of the sentiment indicators remain well within their typical historical ranges. The potential impact that President Trump could have on the domestic and global economy continues to cause uncertainty and/or concern among some investors, while encouraging others. Some individual investors view the market’s upward momentum as positive. Others worry that the sharp upward run will lead to a forthcoming drop in stock prices.

This week’s AAII Sentiment Survey results:

  • Bullish: 37.9%, down 0.6 percentage points
  • Neutral: 26.5%, down 2.8 percentage points
  • Bearish: 35.6%, up 3.3 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 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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