AAII Sentiment Survey: Pessimism Remains Above 50%

Slightly more than half of all individual investors described their six-month outlook for the stock market as “bearish” in the latest AAII Sentiment Survey. Optimism declined while neutral sentiment rebounded.

Bullish sentiment, expectations that stock prices will rise over the next six months, declined 0.4 percentage points to 23.3%. Optimism was last lower on October 9, 2019 (20.3%). Bullish sentiment is below its historical average of 38.0% for the 10th consecutive week and the 15th week this year.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rebounded by 2.4 percentage points to 26.1%. Neutral sentiment remains below its historical average of 31.5% for the 13th consecutive week and the 17th time in 18 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, pulled back by 2.0 percentage points to 50.6%. Pessimism is above its historical average of 30.5% for the 12th consecutive week.

Pessimism is at an unusually high level for the 10th consecutive week. On six of those 10 weeks, bearish sentiment has been at or above 50%. Optimism, meanwhile, is at an unusually low level for the third time in four weeks.

The continued high level of pessimism reflects the coronavirus pandemic and concerns about the economy. However, some AAII members have been encouraged by the rebound in the stock market from its March lows. Many—but not all—have also told us that they have used the downturn to look for buying opportunities among stocks (see this month’s AAII Journal for more). Other factors influencing AAII members’ sentiment include the upcoming November U.S. presidential election, corporate earnings and valuations.

This week’s AAII Sentiment Survey results:

• Bullish: 23.3%, down 0.4 percentage points
• Neutral: 26.1%, up 2.4 percentage points
• Bearish: 50.6%, down 2.0 percentage points

Historical averages:

• Bullish: 38.0%
• Neutral: 31.5%
• Bearish: 30.5%

Want to weigh in? Take the survey yourself and see results online at www.aaii.com/sentimentsurvey.

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See more Sentiment Survey results.