Investors Modestly Optimistic About 2015 S&P 500 Gains

Posted on January 5, 2015 | AAII Survey

Last week’s Sentiment Survey special question asked AAII members what percentage gain or loss the S&P 500 will realize in 2015. Respondents were modestly optimistic. Nearly 60% expected a gain of no more than 10%. More than a third of all respondents (36.3%) said the large-cap stock index would end 2015 up between 5% and 10%, and slightly less than a quarter of respondents (22.3%) expected a rise of 5% or less. About 20% of respondents expected the S&P 500 to rise by double-digits again, though the majority of these individual investors projected gains between 10% and 15%. Just 16% of respondents expected a decline, with 7% of all respondents calling for a decline of 5% or less and 9% anticipating a loss in excess of 5%.



AAII Sentiment Survey: Optimism Stays at an Unusually High Level

Posted on January 5, 2015 | AAII Survey

Optimism among individual investors remains at an unusually high level for the second consecutive week, according to the latest AAII Sentiment Survey. Conversely, pessimism is below 20% for a second consecutive week—an occurrence that has been rare during the past nine years. Despite this bullish stance, many individual investors are anticipating the S&P 500’s gain this year to be limited to no more than 10%.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose by a modest 0.8 percentage points to 51.7%. The rise keeps optimism above its historical average of 39.0% for the 19th time in 21 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, declined 1.2 percentage points to 29.0%. The decline keeps neutral sentiment below its historical average of 30.5% for the second consecutive week.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose by 0.4 percentage points to 19.3%. Even with the modest rise, pessimism is below its historical average of 30.5% for the 11th consecutive week. Last year (2014), there were 43 weeks with a below-average reading for bearish sentiment.

Pessimism is below 20% on consecutive weeks for the just the third time since 2005. Bearish sentiment was below 20% on November 6 and 13, 2014, and on January 5 and 12, 2012. Bearish sentiment readings below 20.5% are unusually low (more than one standard deviation below average) and have been correlated with slightly lower than typical returns for the S&P 500 over the following six-month periods, as I explained in the June 2014 AAII Journal.

Bullish sentiment is above 50% for the second consecutive week and for the fifth time in nine weeks. Readings above 49.2% are unusually high. Unusually high levels of optimism have been historically correlated with below-average market gains over the following six and 12 months.

Individual investors are encouraged by the overall upward momentum of stock prices, falling energy prices, earnings growth and sustained economic expansion. Keeping other AAII members cautious are geopolitical events, the impact of falling oil prices on energy stocks, a sense that prevailing valuations for other stocks are too high, the pace of economic growth and worries that a large drop in stock prices is forthcoming.

This week’s AAII Sentiment Survey results:

  • Bullish: 51.7%, up 0.8 percentage points
  • Neutral: 29.0%, down 1.2 percentage points
  • Bearish: 19.3%, up 0.4 percentage points

Historical averages:

  • Bullish: 39.0%
  • Neutral: 30.5%
  • 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.



Sell OF THE WEEK 12/24/2014

Posted on December 31, 2014 | Podcast

AAII Journal Editor Charles Rotblut gives updates on previous “Sell of the Week” stocks Exxon Mobil (XOM), Stephan Company (SCL) and Lululemon (LULU) to Chuck Jaffe of MarketWatch on the MoneyLife Radio Program. MoneyLife is a daily personal finance show that sorts through the financial clutter to bring you the information you need to lead the MoneyLife.

Audio url: Sell of the week





Take Advantage of Not Being a Professional Money Manager

Posted on December 30, 2014 | Dividend Investing

Money managers will be eyeing their year-end return numbers closely because managers are judged on performance. As an individual investor, you have the advantage of not having to report your performance. This is a huge advantage because it means never having to make short-term trading decisions in hopes of boosting your performance figures or making your portfolio look more attractive to clients. Rather, the only performance number that matters for you is whether you have enough money to fulfill your financial goals. You get the luxury of focusing on the long term, while money managers have to worry about keeping clients and their jobs every quarter. We can’t emphasize enough how big of an advantage this is for you.

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Thank you Santa

Posted on December 30, 2014 | Stock Superstars Report

You may or may not have noticed, but Santa has done some solid lifting since our last update on December 19 and pushed stocks higher. The end result was that the SSR portfolio is up 0.4% while the benchmark iShares Dow Jones U.S. fund (IYY) is up 0.2%. Oil continues to be a theme as it has declined into the mid-$50-per-barrel range. Consumers are thrilled at the gift of lower gasoline prices courtesy of Saudi Arabia, who refused to approve production cuts at the last OPEC meeting. How long these prices can last or whether they can go lower, we do not know.

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BUY OF THE WEEK 12/30/2014

Posted on December 30, 2014 | Podcast

AAII Journal Editor Charles Rotblut gives updates on previous “Buy of the Week” stocks Jet Blue (JBLU), Broadcom (BRCM) and Alliance Fiber Optic Products Inc. (AFOP) to Chuck Jaffe of MarketWatch on the MoneyLife Radio Program. MoneyLife is a daily personal finance show that sorts through the financial clutter to bring you the information you need to lead the MoneyLife.

Audio url: Buy of the week




Nearly Half of Investors Believe FOMC’s Guidance is Clear

Posted on December 29, 2014 | AAII Survey

This week’s Sentiment Survey special question asked AAII members how clear they think the Federal Open Market Committee (FOMC) is being with its guidance of when interest rates will begin to be raised. Nearly one-third of respondents (32.9%) said the FOMC is being clear or very clear. An additional 17% described the committee either as being as clear as economic conditions allow or as clear as they intend to be. Conversely, about one-quarter of respondents (24.3%) said the FOMC is not being clear.

Here is a sampling of the responses:

  • “As clear as they can be. It’s clear to me that the answer is ‘not yet.’”
  • “I do not feel that they have been totally clear about when they will change interest rates.”
  • “I think Janet Yellen has been very easy to understand and to-the-point with her views.”
  • “They are being as clear as they think is necessary.”
  • “Not too clear—they are dancing around the subject.”
  • “I don’t think they want to be completely transparent.”


AAII Sentiment Survey: Optimism Rebounds, Tops 50%

Posted on December 29, 2014 | AAII Survey

The latest AAII Sentiment Survey shows a positive reaction by individual investors to the new record highs established by large-cap stocks. Optimism surged back above 50%, while pessimism plunged.

Bullish sentiment, expectations that stock prices will rise over the next six months, ended a three-week slide with a 12.2 percentage point rebound to 50.9%. The rebound puts optimism above its historical average of 39.0% for the 18th time in 20 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, fell 4.2 percentage points to 30.2%. The decline puts neutral sentiment below its historical average of 30.5% for the first time in four weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, plunged 8.0 percentage points to 18.9%. This is a seven-week low. It is also the 10th consecutive week and the 43rd week this year with pessimism below its historical average of 30.5%.

This is the fourth time in eight weeks that bullish sentiment is above 50%. Readings above 49.2% are unusually high. Bearish sentiment, meanwhile, is at an unusually low level (below 20.5%) for the third time in eight weeks. Unusually high levels of optimism have been historically correlated with below-average market gains over the following six and 12 months, as I explained in the June 2014 AAII Journal.

The rebound in optimism occurred as the S&P 500 and the Dow Jones industrial average avoided what would have been their second pullback this calendar quarter and rebounded to new record highs. Individual investors are also encouraged by falling energy prices, earnings growth and sustained economic expansion. Keeping other AAII members cautious are geopolitical events, weakness in energy stocks, a sense that prevailing valuations for other stocks are too high, the pace of economic growth and worries that a larger drop in stock prices is forthcoming.

This week’s AAII Sentiment Survey results:

  • Bullish: 50.9%, up 12.2 percentage points
  • Neutral: 30.2%, down 4.2 percentage points
  • Bearish: 18.9%, down 8.0 percentage points

Historical averages:

  • Bullish: 39.0%
  • Neutral: 30.5%
  • 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.



Stocks: Realtime Quotes Charts for Android

Posted on December 27, 2014 | Computerized Investing

Stocks: Realtime Quotes Charts for Android is an app made by StockSpy Apps Inc. that assists investors in tracking stocks and markets through price quotes, charts, news and more. The app is available for several different operating systems, but this version was downloaded to an Android tablet.

After you download and launch the app, you will be brought to the home page. Here you have the choice of looking at charts or a browser. Both selections are available at the top of the app. If you choose charts, you will see a list of indexes along the right-hand side as well as a default group of stocks. To see a given chart, click the ticker symbol of the chart you would like to view. If you choose the “browser” option, you can search the Internet with the app open. This is an interesting feature not common in many stock-related apps.

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Sell OF THE WEEK 12/24/2014

Posted on December 24, 2014 | Podcast

AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why Joy Global (JOY) is his “Sell of the Week” on the MoneyLife Radio Program. MoneyLife is a daily personal finance show that sorts through the financial clutter to bring you the information you need to lead the MoneyLife.

Audio url: Sell of the week





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