This week notwithstanding, optimism about the short-term direction of the stock market
has been below average for 40 out of 50 weeks this year in our AAII Sentiment Survey. Given this trend, I was curious as to how 2017 compares to the 30 previous years tracked by our survey. So, I updated the historical analysis I’ve been keeping on unusually high and low readings (see the table at the end of this commentary) and then conducted calendar-year analysis.
Year to date, bullish sentiment is averaging 34.5% (including this week’s latest reading of 45.0%). Historically, bullish sentiment has averaged 38.5% over the life of our survey. (The average is technically 38.27%, but investing is messy and rounding works well enough.) Relative to the other 30 calendar years we have survey data for, 2017 ranks eighth in terms of having the lowest average bullish sentiment.
As you can see on the table located to the right, 1988 and 1990 had the lowest average levels of optimism at 27.3% each. Notably, in third and fourth place were 2016 and 2015. Not shown in the table are the years with the highest level of average bullish sentiment: 2000 (49.4%), 2004 (49.0%) and 2003 (48.4%). Continue Reading »
AAII Members Receive Tax Guidance
The December AAII Journal features our popular tax guide. This annual guide helps investors stay up to date with the ever-changing tax regulations, includes last-minute reminders for 2017 and provides preliminary tax strategies for 2018.
It will help you understand your current tax liability and what you can do to potentially lower your tax bill this year and next year.
Start your AAII membership today to get The Individual Investor’s Guide to Personal Tax Planning 2017, and to benefit from everything AAII has to offer.
More on AAII.com
- Analyzing the AAII Sentiment Survey Without Hindsight – I discussed how we determine what an unusually high or low reading is, and our rationale for doing so, in this 2014 AAII Journal article. The data is older, but the explanations remain valid.
- Investment Sentiment Indicators: Quite Contrary? – In this 2004 AAII Journal article, Mark Hulbert discussed the history of sentiment indicators and made observations on their usefulness.
Highlights from this month’s AAII Journal
- How Human Behavior Differs From Traditional Economic Models – Richard Thaler, who was recently awarded the Nobel Prize in economics, explains why economic models err by not considering the big impact that supposedly irrelevant factors have.
- The Individual Investor’s Guide to Personal Tax Planning 2017 – Our annual tax guide has the information you need to start your year-end tax planning and begin planning for 2018.
AAII Sentiment Survey
Bullish sentiment jumped to a five-week high, while both neutral and bearish sentiment fell. More about this week’s results.
This week’s results:
- Bullish: 45.0%, up 8.1 points
- Neutral: 26.9%, down 2.0 points
- Bearish: 28.1%, down 6.1 points
- Bullish: 38.5%
- Neutral: 31.0%
- Bearish: 30.5%
What’s Trending on AAII
- The Mathematics of Retirement Portfolios
- Retirement Readiness Is Being Assessed in the Wrong Manner
- The Individual Investor’s Guide to Personal Tax Planning 2017
The Week Ahead
The Senate is expected to vote on the Tax Cuts and Jobs Act possibly as early as Monday, according to news reports. If it passes (and political observers expect it to pass), the House of Representatives will vote afterward. CNBC’s Larry Kudlow said that the provision requiring investors use first-in, first-out accounting when selling shares of a stock bought on different dates has been removed, though the text of the revised bill has yet to be made available.
We’ll get an initial look at fourth-quarter earnings with 12 members of the S&P 500 scheduled to announce their results. Included in this group are Micron Technology Inc. (MU) and FedEx Corp. (FDX) on Tuesday and Dow Jones industrial average component Nike Inc. (NKE) on Thursday.
The week’s first economic report will be the December Housing Market Index, released on Monday. November housing starts and building permits will be released on Tuesday. November existing home sales will be released on Wednesday. Thursday will feature the final revision to third-quarter GDP and the Philadelphia Federal Reserve’s December business outlook survey. November durable goods orders, November personal income and spending, November new home sales and the University of Michigan’s final December consumer sentiment survey will be released on Friday.
One Federal Reserve official will make a public appearance this week, Minneapolis president Neel Kashkari on Tuesday.
The Treasury Department will auction $14 billion of five-year inflation adjusted securities (TIPS) on Thursday.
Local Chapter Meetings
AAII Local Chapter Meetings offer you a variety of presentations from expert speakers who will give you their view on the world of investing. A bonus of attending a Chapter Meeting near you is the opportunity to meet other AAII members who share your interest and enthusiasm for investing. You can even share the Chapter experience with your family and friends by inviting them to attend Chapter Meetings with you! Upcoming Meetings »