AAII Sentiment Survey: Bullish Sentiment Sees a Surge, Neutral Sentiment Drops

The results from the latest AAII Sentiment Survey saw bullish sentiment rebound to close to its historical average. In addition, the number of individual investors describing their outlook for stocks as “neutral” dropped.

Bullish sentiment, expectations that stock prices will rise over the next six months, jumped 12.4 percentage points to 37.9%. This is the fifth consecutive week that bullish sentiment is below the historical average of 38.0%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, fell by 7.4 percentage points to 30.3%. This drop follows last week’s big jump and puts neutral sentiment back below its historical average of 31.5%.

Bearish sentiment, expectations that stock prices will fall over the next six months, decreased by 5.0 percentage points to 31.8%. This week is the fifth consecutive and the 10th time out of the last 11 weeks that bearish sentiment is above the historical average of 30.5%.

The return to normalcy from the coronavirus pandemic, monetary and fiscal stimulus and inflationary pressures are influencing individual investors’ outlook for stocks. Other factors include earnings, the Biden administration’s initiatives and valuations.

In this week’s special question, we asked AAII members to share their thoughts on the current state of the economy. A little under half of respondents (44%) believe the economy is being adversely affected by inflation, supply chain issues and the coronavirus pandemic. Furthermore, 26% of respondents express mixed feelings about the state of the economy for a variety of reasons. This compares to 23% of respondents that say they had a positive outlook for the economy, citing short-term and long-run growth. About 2% of responses have a neutral outlook on the economy.

Here is a sampling of the responses:

• “It’s still being affected by the coronavirus pandemic. We need the lagging states to increase vaccinations before the economy will improve.”
• “It’s strong right now considering the complications of the pandemic. But it appears fragile for the same reason.”
• “It’s good in that many investors are able to judge it. Earnings soon may certify this.”

See more Sentiment Survey results.