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Investors’ Six-Month Equity Outlook Growing Cautious

This week’s Sentiment Survey special question asked AAII members how, and why, their six-month outlook for stocks has evolved since the start of the year. Nearly 44% said they have either turned more cautious or are otherwise currently cautious. Elevated valuations and a general sense that the market is due for a larger drop of a correction were the primary reasons why. Other respondents cited the possibility of a forthcoming rate hike as the reason for their more cautious stance.

More than a quarter of all respondents (26%) said their outlook has not changed, while 18% said they are more optimistic. Sustained economic growth was the primary reason given by those whose outlooks are more upbeat.

Here is a sampling of the responses:

  • “Gone from bullish to neutral largely due to the pending increase of interest rates by the Fed.”
  • “Remain bullish because the U.S. economy is improving.”
  • “My guess is that the market is overdue for a 10% to 20% correction.”
  • “Valuation for stocks seems to be on the high side.”
  • “Slow, but sustained, economic growth and low interest rates continue to make for a positive market.”
 

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