The Ultimate Guide to Retail Investor Sentiment: AAII Survey Reveals Increase in Pessimism
In the latest American Association of Individual Investors (AAII) Sentiment Survey, pessimism among retail investors is on the rise. The survey, which measures individual investors' expectations for stock prices over the next six months, showed a shift in sentiment.
Bearish sentiment, reflecting expectations of declining stock prices, increased by 3.3 percentage points to 27.0%. Despite this rise, bearish sentiment remains below its historical average of 31.0% for the third consecutive week.
Bullish sentiment, representing the expectation of rising stock prices, dipped slightly by 0.5 percentage points to 51.2%. However, it is still significantly above its historical average of 37.5%. This is the 42nd time in the past 43 weeks that bullish sentiment has exceeded its long-term average.
Neutral sentiment, indicating expectations of unchanged stock prices, saw a more substantial decline, dropping by 2.9 percentage points to 21.9%. It remains below the historical average of 31.5% for the eighth week in a row.
The bull-bear spread, the difference between bullish and bearish sentiment, narrowed by 3.8 percentage points to 24.2%. However, it remains well above its historical average of 6.5%, marking the 16th time in 17 weeks that the spread has been higher than usual.
The survey also revealed investor opinions on gold prices, with a majority expressing skepticism about their sustainability over the next year. 29.7% believe gold prices will decrease moderately, while 27.0% believe they will increase further.
Analysis:
The increase in pessimism among retail investors, as shown in the AAII Sentiment Survey, indicates a shift in sentiment towards the stock market. Despite the rise in bearish sentiment, bullish sentiment remains high, exceeding its historical average. This could suggest a potential market correction or volatility in the near future. Investors should keep a close eye on market trends and sentiment indicators to make informed decisions about their investments.