AAII Sentiment Survey: Fewer Than 1 Out of 5 Investors Have a “Neutral” Outlook

Fewer than one out of five individual investors described their short-term outlook for stocks as “neutral” in the latest AAII Sentiment Survey. Optimism, meanwhile, is back at an unusually high level.

Bullish sentiment, expectations that stock prices will rise over the next six months, jumped 8.0 percentage points to 54.0%. Optimism was last higher on November 11, 2020 (55.8%). The increase keeps bullish sentiment above its historical average of 38.0% for the ninth consecutive week.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, plunged 7.8 percentage points to 19.4%. Neutral sentiment was last lower on November 11, 2020 (19.3%). The drop keeps neutral sentiment below its historical average of 31.5% for the 49th time out of the past 52 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, declined 0.2 percentage points to 26.6%. Pessimism is below its historical average of 30.5% for the ninth consecutive week.

Optimism is now at an unusually high level. Neutral sentiment is at an unusually low level. Historically, both above-average readings for bullish sentiment and below-average readings for neutral sentiment have been followed by below-average six- and 12-month returns for the S&P 500 index.

The rollout of the vaccines has helped to improve the outlook of many individual investors. The stock market’s momentum is also having an influence on sentiment. Concern about the shorter-term trends in coronavirus cases and the resulting economic impact remain, however. Also playing a role are the forthcoming administration and the Democrats’ control of the Senate, the rising level of national debt, valuations and interest rates.

See more Sentiment Survey results.