AAII Investor Sentiment Survey

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Since 1987, AAII members have been answering the same simple question each week. The results are compiled into the AAII Investor Sentiment Survey,
which offers insight into the mood of individual investors.

Survey Results for Week Ending 11/30/2016

Data represents what direction members feel the
stock market will be in next 6 months.


HISTORICAL AVERAGE: 38.5%
BULLISH
43.8%
-6.1
Percentage point
change from
last week
HISTORICAL AVERAGE: 31.0%
NEUTRAL
31.1%
+3.1
Percentage point
change from
last week
HISTORICAL AVERAGE: 30.5%
BEARISH
25.1%
+3.0
Percentage point
change from
last week

Note: Numbers may not add up to 100% because of rounding.

The AAII Investor Sentiment Survey has become a widely followed measure of the mood of individual investors. The weekly survey results are published in financial publications including Barron's and Bloomberg and are widely followed by market strategists, investment newsletter writers and other financial professionals.

AAII Sentiment Survey:

Optimism pulled back this week following its 13th-largest three-week rise in our survey’s history. At current levels, bullish sentiment is back within its typical range.

December 1, 2016

Optimism pulled back in the latest AAII Sentiment Survey after having risen significantly over the previous three weeks. Both neutral and bearish sentiment rebounded this week, after having both previously fallen.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell by 6.1 percentage points to 43.8%. The pullback follows last week's reading of 49.9%, which was the highest level recorded by our survey since January 1, 2015 (51.7%). Even with this week's drop, bullish sentiment remains above its historical average of 38.5% for a fourth consecutive week.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rebounded by 3.1 percentage points to 31.1%. The increase puts neutral sentiment about even with its historical average of 31.0%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 3.0 percentage points to 25.1%. Pessimism was last lower on August 17, 2016. The increase is not large enough to prevent pessimism from remaining below its historical average of 30.5% for a fourth consecutive week.

This week's results follow a significant shift in sentiment. During the three-week period of November 2 through November 23, 2016, optimism rose by a cumulative 26.3 percentage points, neutral sentiment fell by a cumulative 14.0 percentage points and pessimism fell by a cumulative 12.2 percentage points. The rise in bullish sentiment was the 13th largest three-week increase in the survey’s 29-year history.

The election's outcome remains front and center for many AAII members. Some are encouraged by possible changes President-elect Donald Trump could make, while others are uncertain or want to wait to see how his administration’s policies and their impact on the market evolve. There are also individual investors who are pessimistic following the election. Beyond the election, the direction of interest rates, the pace of economic and earnings growth, and valuations are influencing individual investors' expectations for the stock market.

Last week's special question asked AAII members how third-quarter earnings have impacted their market outlook. Responses were very mixed. The largest group of respondents (28%) said that third-quarter earnings did not have any impact or had little impact on their market outlook. Many of these respondents said the election's outcome was more influential. About 18% described themselves as being more optimistic due to earnings, particularly over the short term. Conversely, 11% said that earnings remain too low to support current valuations. Others said that they are anticipating more/continued market volatility or want to see how the market reacts to the new administration over the coming months.

Here is a sampling of the responses:

  • "Earnings, not very much. Politics, on the other hand, are having a MAJOR effect."
  • "Earnings were satisfactory, but the market P/E is still high, suggesting trouble ahead."
  • "Quarterly earnings data is mostly just noise—to be ignored."
  • "Earnings have improved my outlook for stocks."
  • "Generally modest earnings translate into modest growth in the market."

This week's special question asked AAII members how the average consumer is fairing relative to a year ago. Approximately 45% view the average consumer as faring better or somewhat better than a year ago. A better job market, low inflation and economic growth were the primary reasons why. Slightly more than 20% think the average consumer is faring about the same as a year ago. Some of these respondents cited a lack of adequate wage growth. Nearly 15% think the average consumer is faring worse, primarily because of a perception that wage growth is not keeping up with inflation.

Here is a sampling of the responses:

  • "About the same. Gasoline prices remain low, but food seems to keep getting more expensive."
  • "Better. Employment is higher, interest rates remain low and inflation is still in check."
  • "Better. Job growth has been steady, wages are up and inflation is low.”
  • "Fair to poor because income is not keeping up with real inflation."
  • "I believe the average person is doing better, but not significantly better."

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How to Use the AAII Sentiment Survey as a Gauge of Future Market Direction

Over the years, AAII analysts have examined the weekly results and have tried to give some perspective to the data. These articles are the results of some of this analysis.

Analyzing the AAII Sentiment Survey Without Hindsight »
Using the AAII Sentiment Survey as a Contrarian Indicator »