AAII Sentiment Survey: Pessimism Stays Above Average for Eighth Consecutive Week

Pessimism among individual investors has slightly decreased but remains above average for the eighth consecutive week in the latest AAII Sentiment Survey. Neutral sentiment jumped, while optimism declined.

Bullish sentiment, expectations that stock prices will rise over the next six months, plunged 7.2 percentage points to 26.1%. After moving closer to its average last week, optimism has pulled back to an unusually low level. Bullish sentiment remains below its historical average of 37.5% for the 71st time out of the past 73 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 7.9 percentage points to 39.5%. Neutral sentiment is above its historical average for the 14th time out of the past 15 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, decreased 0.5 percentage points to 34.5%. After a stretch of being unusually high, pessimism has been reverting closer to its average. However, bearish sentiment is still above its historical average of 31.0% for the 68th time out of the past 73 weeks.

The bull-bear spread (bullish minus bearish sentiment) decreased 6.7 percentage points to –8.4%. This puts the bull-bear spread back at an unusually low level.

With inflation down to 5%, the economic climate could be viewed as being on the rise. Market volatility has been a concern for individual investors.

Though individual investors mostly approved of the latest interest rate hike being smaller, inflation, market volatility and the pace of economic growth continue to influence individual investors’ short-term outlook for stocks.

This week’s special question asked AAII members how they would describe the current state of the economy. Here are their responses:

• Lousy: 18.5%
• Mixed: 64.2%
• Good: 15.0%
• Great: 0.4%
• Not sure/no opinion: 2.0%

See more Sentiment Survey results.