At the end of July, the American Association of Individual Investors announced a four-year low in the Investor Sentiment Survey. By mid-August, optimism among individual investors experienced its biggest weekly percentage-point move since March 2020.
Bullish sentiment, expectations that stock prices will rise over the next six months, rose 6.7 percentage points to 30.0%. This marks a jump in optimism when compared with the end-of-July survey, which ranked among the 40 lowest readings ever recorded by the AAII Sentiment Survey. Confidence was last lower on May 25, 2016 (17.8%).
Survey results for the week ending on August 12, 2020, shows lower levels of neutral and bearish sentiment. Bullish sentiment is still below its historical average of 38.0% for the 23rd consecutive week and the 28th week this year. Bearish sentiment, expectations that stock prices will fall over the next six months, declined 5.5 percentage points to 42.1%. Pessimism is above its historical average of 30.5% for the 25th consecutive week and the 27th time this year.
“Bullish sentiment has been below average since mid-March when the pandemic worsened in the U.S., and shelter-in-place orders became more prevalent, said Charles Rotblut, Vice President and Editor of the AAII Journal. “Many individual investors remained concerned about the potential economic impact of another spike in coronavirus cases. These fears have not deterred them from sticking to their long-term investment strategies, which include a large allocation to stocks.”
In his latest AAII Journal article, Determining the Appropriate Level of Risk for You, Rotblut shares an investor worksheet to help investors understand their own tolerance for risk. It’s part of The AAII Way, a comprehensive plan that can be used as an investing guide. The AAII Way helps reduce investment-related costs and expenses. Combining Sentiment Survey Data with The AAII Way gives investors the ability and tools to do independent market research and build a framework for making intelligent investing decisions.
In addition to Sentiment Surveys, AAII offers ETF Investing Guides, tools, and features for ETF investors to all of their Premium Members. AAII knows that investors are focusing on ETFs, a popular form of “passive investing,” because they offer attractive low expense ratios and substantial diversification. The latest AAII ETF Investing Guide shares the best and worst performing ETFs over the last three-month, one-year, and five-year periods.
The American Association of Individual Investors (AAII) is an independent, nonprofit education group that provides the tools, resources and programs of education to assist individuals in successfully building and managing their own assets. AAII members receive our monthly Journal, model portfolios, access to over 50 local chapters and comprehensive investment education. The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: https://www.aaii.com/sentimentsurvey.