AAII: The American Association of Individual Investors

AAII Investor Sentiment Survey

Since 1987, AAII members have been answering the same simple question each week:

[

Do you feel the direction of the market over the next six months will be up (bullish), no change (neutral) or down (bearish)?

]

The results are compiled into the AAII Investor Sentiment Survey,
which offers insight into the mood of individual investors.

Survey Results for Week Ending 12/13/2017

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


HISTORICAL AVERAGE: 38.3%
BULLISH
45.0%
+8.1
Percentage point
change from
last week
HISTORICAL AVERAGE: 31.4%
NEUTRAL
26.9%
-2.0
Percentage point
change from
last week
HISTORICAL AVERAGE: 30.3%
BEARISH
28.1%
-6.1
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:

Bullish sentiment jumped to a five-week high, while both neutral and bearish sentiment fell.

Optimism among individual investors about the short-term direction of the stock market is at a five-week high. The latest AAII Sentiment Survey also shows declines in the proportion of individual investors describing their short-term outlook as being “neutral” or “bearish.”

Bullish sentiment, expectations that stock prices will rise over the next six months, jumped 8.1 percentage points to 45.0%. Optimism was last higher on November 9, 2017 (45.1%). This is the first time in five weeks that bullish sentiment is above its historical average of 38.5%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, fell 2.0 percentage points to 26.9%. Neutral sentiment was last lower on November 2, 2017 (26.4%). The historical average is 31.0%.

Bearish sentiment, expectations that stock prices will fall over the next six months, plunged 6.1 percentage points to 28.1%. Pessimism was last lower on November 9, 2017 (23.1%). The historical average is 30.5%.

Bullish sentiment is above its historical average for just the 10th week this year. Though optimism has been below average for much of the year (an average reading of 34.5%), 2017 has not been a year of excessively low optimism. Rather, this year is on track to rank eighth (out of 31) in terms of having the lowest average calendar-year bullish sentiment reading.

Most of this week’s results were recorded before the outcome of Alabama’s special election were known and yesterday’s Federal Open Market Committee meeting statement and committee member forecasts were released. Our previous polling of individual investors shows that most are not currently making investment decisions based on the pending tax legislation. While some of our members are optimistic about the prospects of tax reform being passed, about 40% of those polled in a different weekly AAII survey said the proposed legislation could hurt them.

This year’s record highs for the major U.S. stock indexes have encouraged some individual investors, though others have expressed concerns about the possibility of a pullback or a more severe drop occurring. Also affecting investor sentiment are earnings growth, economic growth, valuations and the lack of volatility. Washington politics remains at the forefront of many individual investors’ minds.

This week’s special question asked AAII members how they perceive the performance of the stocks they own or follow relative to the year-to-date returns of the S&P 500 index and the Nasdaq composite. Slightly more than 37% of respondents said their returns are close to the major indexes, are beating the S&P 500 but not the Nasdaq, or have some stocks that are beating the indexes and some that are trailing. Approximately 35% say they are either beating one or both of the aforementioned indexes or otherwise happy with their year-to-date returns. Just under 26% say they are underperforming, though many of these respondents explained they are using more conservative allocations or are focused more on value stocks, which have lagged growth stocks year to date.

Here is a sampling of the responses:

  • “My stocks have done well overall, exceeding the S&P 500.”
  • “Some stocks are above the S&P 500 and the Nasdaq, while some are below.”
  • “About the same. Roughly in line with the market’s gains.”
  • “I have performed lower due to a value-based stock selection strategy.”
  • “Mine will underperform both of those indexes, but will be less volatile.”
  • “I follow AAII’s Model Shadow Stock portfolio. The performance is above expectations.”

To keep reading »

Share your email for access to AAII's Weekly Sentiment Survey Commentary. It's a valuable free service that keeps you updated on the AAII market sentiment data we publish.

100% Privacy Guaranteed.


AAII Investor

Sentiment Survey

Learn where individual investors think the market is headed over the next six months and how these levels may be used to forecast future market movement.

FREE Weekly AAII Market Sentiment Email

100% Privacy Guaranteed.

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 »




Explore the Many Benefits of AAII Membership...

The AAII Journal
The AAII Journal provides you with investment ideas, insights and direction that are designed to make you a smarter and more successful investor. Click here to get a free copy.
AAII.com
Your ticket to valuable AAII stock screens, model portfolios, investment mini-courses, FREE investor e-books and extensive investment research. Forbes Magazine says, "Best articles ... best stock screens."
AAII Model Portfolios
With a long history of beating the market, our portfolios give you proven, practical, real-world investment guidance and instruction. We offer Fund, ETF and Stock models free to all members.
Guide to the Top Mutual Funds
Providing data and insights on over 700 promising mutual funds, this guide will help direct you to the funds that are worthy of both your time and your money.
Stock Reports and Research
Through our long standing relationship with Standard & Poor's, members receive in-depth reports for a number of indexes and corporations.
Lists of Winning Stocks
AAII Stock Screens provide the investment philosophies and passing company lists from some of the most promising professionals and academics. Warren Buffet, Peter Lynch, John Neff and over 50 others are covered.
Local Chapter Membership
You get free enrollment to your choice of over 50 local AAII chapters plus numerous special interest groups around the country.