AAII Sentiment Survey: Pessimism Plunges, but Stays Unusually High
by AAII Staff | June 30, 2022
Pessimism among individual investors plunged this week but remains at an unusually high level in the latest AAII Sentiment Survey. Additionally, both bullish and neutral sentiment rose.
Bullish sentiment, expectations that stock prices will rise over the next six months, rose 4.6 percentage points to 22.8%. Bullish sentiment is below its historical average of 38.0% for the 32nd consecutive week and at an unusually low level for the 21 of the last 25 weeks.
Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, jumped 8.1 percentage points to 30.5%. Neutral sentiment is below its historical average of 31.5% for the ninth time in 10 weeks.
Bearish sentiment, expectations that stock prices will fall over the next six months, pulled back by 12.6 percentage points to 46.7%. Bearish sentiment is above its historical average of 30.5% for the 31st time out of the past 32 weeks and at an unusually high level for 20 of the last 24 weeks.
The bull-bear spread (bullish minus bearish sentiment) is –23.9% and is unusually low for the 22nd time in 25 weeks.
Historically, the S&P 500 index has gone on to realize above-average and above-median returns during the six- and 12-month periods following unusually low readings for bullish sentiment and for the bull-bear spread. Unusually high bearish sentiment readings historically have also been followed by above-average and above-median six-month returns in the S&P 500. The S&P 500 has underperformed following periods of below-average neutral sentiment, though the link is weaker.
Continued volatility in the major stock indexes along with inflation, corporate earnings and increased chatter about the possibility of a recession are all likely weighing on individual investors’ short-term expectations for the stock market. Also influencing sentiment are monetary policy, the coronavirus pandemic, politics and the ongoing invasion of Ukraine by Russia.
Bullish: 22.8%, up 4.6 points
Neutral: 30.5%, up 8.1 points
Bearish: 46.7%, down 12.6 points
Bullish: 38.0%
Neutral: 31.5%
Bearish: 30.5%
See more Sentiment Survey results.
Discussion
JOHN P from CA posted over 4 years ago:
The average investor is bearish and thinks stocks will go down over the next six months by 2 to 1 ratio. Clearly, the meter at the top of the Sentiment Survey should be pointing towards FEAR, not towards GREED. Fix the meter!
ERIC B from MD posted over 4 years ago:
We need an explanation of the meter.
You need to log in as a registered AAII user before commenting.
Create an account