AAII Sentiment Survey: Neutral Sentiment Rises to a 6-Week High

The percentage of individual investors describing their six-month outlook for stocks as “neutral” is at a six-week high. The latest AAII Sentiment Survey also shows a decrease in both optimism and pessimism. 

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 4.6 percentage points to 43.4%. Optimism is above its historical average of 38.0% for the sixth consecutive week. 

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rebounded by 5.2 percentage points to 30.3%. Even with the increase, neutral sentiment remains below its historical average of 31.5% for the 47th time out of the past 49 weeks. 

Bearish sentiment, expectations that stock prices will fall over the next six months, declined by 0.6 percentage points to 26.3%. Pessimism is below its historical average of 30.5% for the sixth consecutive week. 

Bullish sentiment is back within its typical range. It remains above 40%, however, for the sixth consecutive week. This is the longest consecutive weekly streak since an eight-week stretch between December 14, 2017, and January 31, 2018.

The positive results from Pfizer’s and Moderna’s late-stage trials have made many individual investors either more optimistic or, at least, less pessimistic. Concern about the shorter-term trends in coronavirus cases and the resulting economic impact remain, however. Also influencing individual investors’ sentiment are the results of the recent election, valuations and interest rates. 

In this week’s special question, we asked AAII members to share their opinion about the DoorDash and Airbnb initial public offerings (IPOs).

A little under half of all respondents (46%) say that the IPOs are priced too high. This compares to about 18% of respondents who say that they do not typically buy IPOs. About 17% of respondents say that they are not interested in the IPOs. In addition, about 9% of respondents say that they think the IPOs are risky bets.

Here is a sampling of the responses:

• “I hope and expect them to do well, however I don’t invest in IPOs especially at launch or shortly thereafter. I have however made some other pre-IPO investments with the realization that those are high risk, illiquid and take some time to pay out (if ever).”
• “Ridiculous, neither company is worth what the IPO has indicated; nowhere to go but down!”
• “Won’t consider buying these two until the frenzied buying and selling subsides. Always thought that novice investors were buying without much knowledge of the accurate value of their stock IPO selection. I would suggest waiting a couple of trading days before considering.”

See more Sentiment Survey results.