Pessimism among individual investors about the short-term outlook for stocks increased in the latest AAII Sentiment Survey. Meanwhile, optimism and neutral sentiment decreased.
Bullish sentiment, expectations that stock prices will rise over the next six months, decreased 1.9 percentage points to 36.9%. Bullish sentiment is below its historical average of 37.5% for the fourth time in six weeks.
Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, decreased 2.3 percentage points to 17.3%. Neutral sentiment is unusually low and is below its historical average of 31.0% for the 33rd consecutive week.
Bearish sentiment, expectations that stock prices will fall over the next six months, increased 4.2 percentage points to 45.8%. Bearish sentiment is unusually high and is above its historical average of 31.5% for the 37th consecutive week.
The bull-bear spread (bullish minus bearish sentiment) decreased 6.0 percentage points to –8.9%. The bull-bear spread is below its historical average of 6.5% for the 14th consecutive week.
This week’s special question asked AAII members what impact inflation is having on their portfolio decisions.
Here is how they responded:
It is not impacting my portfolio decisions: 33.6%
It is having a small, but not significant, impact: 32.0%
It is making me more cautious: 32.8%
Not sure/no opinion: 1.6%
This week’s Sentiment Survey results:
Bullish: 36.9%, down 1.9 points
Neutral: 17.3%, down 2.3 points
Bearish: 45.8%, up 4.2 points
Historical averages:
Bullish: 37.5%
Neutral: 31.0%
Bearish: 31.5%
Bearish at 45.8% against a 31.5% historical average, with neutral at just 17.3%, shows how polarized the survey has become. The bull-bear spread slipping to -8.9% sits well below its 6.5% norm.