AAII Sentiment Survey: Pessimism Above Average for Sixth Consecutive Week

Pessimism among individual investors decreased but remains above average for the sixth consecutive week in the latest AAII Sentiment Survey. Both neutral sentiment and bullish sentiment increased.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 1.6 percentage points to 22.5%. Despite this increase, optimism is still at an unusually low level for the sixth consecutive week and the 46th time out of the past 65 weeks. Bullish sentiment is below its historical average of 37.5% for the 69th time out of the past 71 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 1.7 percentage points to 31.9%. This small increase puts neutral sentiment above its historical average of 31.5%.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 2.8 percentage points to 45.6%. This is the fifth consecutive week and the 44th time out of the past 65 weeks that bearish sentiment is at an unusually high level. Bearish sentiment is also above its historical average of 31.0% for the 66th time out of the past 71 weeks.

The bull-bear spread (bullish minus bearish sentiment) rose by 4.8 percentage points to –23.1% but remains unusually low for the sixth consecutive week. The bull-bear spread is at an unusually low level for the 48th time out of the past 65 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 the bull-bear spread. Similarly, the market benchmark has gone on to realize above-average and above-median returns during the six- and 12-month periods following unusually high readings for bearish sentiment. 

With recent headlines, along with the lingering worry of economic growth and inflation, individual investors are reflecting concern with their investment choices.

This week’s special question asked AAII members if they agree with the Federal Reserve’s decision to raise interest rates by just a quarter point (0.25%). Here are the responses:

• Yes, it was the right decision: 62.9%
• No, they should have raised interest rates by a larger amount: 11.2%
• No, they should not have raised interest rates: 15.4%
• No, they should have lowered interest rates: 1.1%
• Not sure/no opinion: 8.1%

See more Sentiment Survey results.