One-Third of Investors Anticipated September’s Pullback

For this week’s Sentiment Survey special question, we asked AAII members their thoughts about September’s pullback in stock prices.

Nearly one-third of respondents (32%) say that September’s pullback in stock prices was anticipated and a needed correction in the new bull market. This compares to 24% of respondents who say that the pullback in stock prices was partly due to the uncertainty surrounding the presidential election. In addition, 20% of respondents say that September’s pullback in stock prices was just the beginning and stock prices will continue to fall through the end of the year. About 16% of respondents say that September’s pullback in stock prices was driven by uncertainties surrounding the pandemic and the rise in coronavirus cases.

Here is a sampling of the responses:

• “It came as no surprise after the huge increase in stock prices since late March. I feel the market got ahead of reality and believe that is still the case.”
• “ The full impact of the pandemic shutdowns will be coming to light through the end of the year as government support expires or is cut back.”
• “The lack of fiscal stimulus and worsening coronavirus cases are primarily responsible for the market drop. The disconnect between Wall Street and Main Street continues to boggle my mind. I expect considerable volatility through February 2021 mainly by election news.”
• “September’s pullback was partly taking profits and partly due to the uncertainty surrounding presidential election. Coronavirus numbers going up also played a part. All said, September was a crazy month with stock valuations at nosebleed levels. The first presidential debate is a window into the chaos that is in front of us. We will see actions that are unprecedented in the history of this country. Stocks will fall a lot further.”

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