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 6/29/2016

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


HISTORICAL AVERAGE: 38.5%
BULLISH
28.9%
+6.9
Percentage point
change from
last week
HISTORICAL AVERAGE: 31.0%
NEUTRAL
37.7%
-5.1
Percentage point
change from
last week
HISTORICAL AVERAGE: 30.5%
BEARISH
33.4%
-1.8
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:

June 30, 2016

Optimism among individual investors about the short-term direction of the stock market rebounded to a four-week high in the latest AAII Sentiment Survey. Neutral and bearish sentiment both declined, but remain above their respective historical averages.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 6.9 percentage points to 28.9%. This is the ninth time in 10 weeks that fewer than three out of 10 survey respondents are optimistic. It is also the 34th consecutive week and the 67th out of the past 69 weeks with bullish sentiment below its historical average of 38.5%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, fell 5.1 percentage points to 37.7%. The drop nearly negates last week's rise. Even with the decrease, neutral sentiment remains above its historical average of 31.0% for the 22nd consecutive week. 

Bearish sentiment, expectations that stock prices will fall over the next six months, declined 1.8 percentage points to 33.4%. This is the third consecutive week pessimism is above its historical average of 30.5%.

Though optimism did rebound strongly this week, it is only barely within the range of typical readings. The rebound from Friday's and Monday's market drop helped boost bullish sentiment, though AAII members are already pointing to the uncertainty created by Brexit, as is observed in the responses to this week's special question. There was also likely some reversion to the mean given last week's unusually low reading for bullish sentiment. The longer-term trend of low optimism remains intact, with bullish sentiment only exceeding 30% seven times this year.

Giving individual investors cause for concern is the slow pace of U.S. economic growth and uncertain pace of global economic growth, terrorism and global unrest, lackluster corporate earnings, the prevailing level of valuations, the forthcoming November elections, monetary policy and Brexit. Some AAII members, however, are encouraged by sustained domestic economic growth, corporate earnings and the proximity of stock prices to their record highs.

This week’s special question asked AAII members how the performance of the stock market over the first half of the year compares to their expectations. Slightly more than one out of three respondents said the returns matched their expectations. A nearly even number of respondents said the returns exceeded their expectations (20%) or were below their expectations (21%). About 5% of respondents described the market as being more volatile than they expected. Respondents (especially those who described returns as matching their expectations) pointed to the sideways/flat movement of stock prices, slow economic growth, interest rates and their personal holdings as the reasons why.

Nearly 14% of respondents mentioned Brexit specifically. Several of these respondents said Brexit worsened performance relative to their expectations, with some saying the markets had been exceeding or matching their expectations prior to last week’s vote.

When we asked members in late December about the how the S&P 500 would perform this year, slightly more than 20% of respondents forecast an increase of less than 5%, 31% predicted gains of between 5% and 10%, and about 13% called for a decline of between 5% and 15%.

Here is a sampling of the responses:

  • “About what I expected in a no-growth environment.”
  • “Performance has been ‘roller-coaster-like’ as expected.”
  • “Disappointing; had hoped for small gains.”
  • “Excluding the British vote reaction, the market has been about what I expected.”
  • “Performance has been worse. The market continues to overreact to short-term issues.”
  • “Surprisingly better than I expected. Continuing low interest rates are forcing people to buy into stocks.”

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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 »