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Record Highs Negatively Influencing Investors’ Market Outlook

This week’s Sentiment Survey special question asked AAII members how the new record highs set by the major large-cap indexes are influencing their outlook for the stock market. Nearly half of all respondents (47%) say the record highs are having a negative influence. Valuations are a key reason why. Some of these respondents say they are either purposely raising cash or postponing buying new stocks until the market pulls back. Conversely, 28% of respondents say the new highs are a reason to be optimistic, particularly because of the positive momentum stocks are exhibiting. Slightly more than 19% say their outlook hasn’t changed. Many of these respondents described themselves as taking a long-term view of the market.

Here is a sampling of the responses:

  • “Stocks are getting very expensive based on relative measures and suggest a cautious approach until a cleansing correction occurs.”
  • “Although earnings have improved, they have not kept up with the expansion of the market’s multiples.”
  • “The market is in an uptrend and making new highs, which makes me bullish.”
  • “I’m not buying, just stashing cash in the best money market funds I can find.”
  • “I stay fully invested at all times, so I’m a happy camper.”

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