AAII Sentiment Survey: Bullish Sentiment Exceeds Historical Average

The results from the latest AAII Sentiment Survey saw bullish sentiment increase, rising above its historical average. In addition, the number of investors who describe their outlook for stocks as neutral and bearish significantly decreased.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 9.0 percentage points to 46.9%. This is the first time in six weeks that bullish sentiment is above the historical average of 38.0%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, fell by 5.0 percentage points to 25.4%. This is the second consecutive week that neutral sentiment is below the historical average of 31.5%.

Bearish sentiment, expectations that stock prices will fall over the next six months, decreased by 4.0 percentage points to 27.8%. This is the first time in six weeks and the second time out of the last 12 weeks that bearish sentiment is below 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, valuations and the Biden administration’s initiatives. 

In this week’s special question, we asked AAII members to share which factors were currently influencing their six-month outlook on stocks the most.

Respondents could list more than one factor. Out of the 100+ responses we received, 28% consider inflation as a factor. Furthermore, 22% of responses cite government and consumer spending. This compares to 13% of responses selecting supply chain issues as a factor and another 10% mentioning the coronavirus pandemic. About 6% of responses cite taxes as a factor. Four percent of responses are for other shortages not specifically pertaining to supply chains. Around 2% of responses factor in infrastructure. Moreover, international factors are mentioned in 2% of responses. About 12% of responses fall into other factors.

Here is a sampling of the responses:

• “There are short-term factors such as inflation, debt situation, government spending, Federal Reserve chairman. These will be offset by continued growth. I expect much volatility with the market moving in a narrow range overall.”
• “Inflation will drive investors into equities; supply chain issues and lower-than-expected growth will slow the economy—hence my neutral view of the six months ahead.”

See more Sentiment Survey results.