AAII Sentiment Survey: Bullish Sentiment Falls, But Stays Above Historical Average

January 7th, 2010

Bullish sentiment pulled back from its four-month high, according the latest AAII Sentiment Survey. The percentage of investors expecting the markets to rise over the next six months fell 8.2 percentage points to 41%. Nonetheless, this is the seventh time in the last eight weeks that bullish sentiment has been above the historical average of 38.95%.

Though there was a notable increase in the number of respondents expecting the markets to stay essentially flat, we are seeing a glimpse of sustained optimism on the part of individual investors. This is particularly evident in the spread between the bulls and bears, which has been in double digits during four out of the last eight weeks.

The trend confirms the data we are seeing in our Asset Allocation Survey. As of the end of December, individual investors had a 64% allocation to stocks and stock funds. (This is a two-year high.) Allocations to bonds/bond funds and cash were each 18%.

It should be stated that none of these numbers indicate irrational exuberance. Rather, they suggest hope on the part of individual investors that economic conditions are improving.

This week’s AAII Sentiment Survey results:

* Bullish 41.0%, down 8.2 percentage points
* Neutral 33.0%, up 5.1 percentage points
* Bearish 26.0%, up 3 percentage points

Long-Term Averages:

* Bullish: 39%
* Neutral: 31%
* Bearish: 30%

The survey and its results are available online

Contact:
Charles Rotblut, CFA
Vice President and AAII Journal Editor
American Association of Individual Investors
crotblut@aaii.com
http://www.aaii.com

More on this topic (What's this?)
AAII Sentiment Survey Results for 1-28-10 (Chain Bridge Investing, 1/29/10)
Technical Talk: Individuals have below-average allocation to equities (Investment Postcards from Cape Town, 11/17/09)
Dollar Bull Trend NOT Over (Comments for thetechnicaltake, 1/13/12)
Dollar Bull Trend Definitely Over and How This Might Impact Equities (Comments for thetechnicaltake, 1/20/12)
Read more on Alabama Aircraft Industr, Bull market, Survey at Wikinvest

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