Sentiment Update – Individual Investors

• Posted by JC Parets
• on July 12th, 2012

The bears are out there –  large and in charge.

The most recent poll by the American Association of Individual Investors (AAII) just came in with the 10th consecutive week (and 13 out of the last 14 weeks) that bearish sentiment has been above its historical average of 30%. On the bullish side, we’re now at 15 consecutive weeks of below average bullish sentiment. This marks longest streak of below-average bullish readings since 1993.

The survey measures the percentage of individual investors who are bullish, bearish, and neutral on the stock market for the next six months. And once again, the amount of bulls declined, this week down to just 30.2% of investors polled. Meanwhile, 35% were neutral and 34.7% were bearish.

Here is the chart from Bespoke Investment Group comparing the percentage of bullish sentiment with the performance of the S&P500:

 

We like to take a contrarian approach and look to put some risk on when individual investors are scared and pessimistic. When everyone is bullish, we like to get a bit more defensive. So with all of these bears out there, I still prefer a dip buying mentality.

 

Sources:

Bullish Sentiment Remains Muted (PragCap)

Bullish Sentiment Drops (Bespoke)

AAII Sentiment Survey 7/11/12 (AAII)

Full Disclosure: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please see my Terms & Conditions page for a full disclaimer.

blog comments powered by Disqus