The AAII Sentiment Survey is, you guessed it, a survey of how folks feel the market will be performing 6 months in the future.
The chart above is interesting this week because it is the first time that optimism (the green bar) has come in below 20% for consecutive weeks since May 2016. Also, this is only the 33rd time that the bullish sentiment has been below 20% since the survey started in 1987 (35 years ago!).
So, we know that the general public is scared and believes that things are going to get worse. No doubt, this could be true and things could get worse and the market could decline. The good news, though, is that the general public is ‘generally’ wrong.
I would much prefer to see these low numbers on the bullish end than to see everyone and their plumber totally optimistic.
This is because of “Herd Mentality Bias”. Humans are hard-wired to follow the herd. But the herd is not always correct – they are emotion based and have no fundamental support to justify their actions.
Jim’s most recent write up of The Seven Signs of a Changing Economy provides fact-based, source cited evidence as to what the markets are doing and where they are going 6-9 months from now. With the exception of inflation, all signs are positive.
Yet, 81.1% of people surveyed are either neutral or bearish.
The majority of folks are prepared and expecting downward trends to continue. So, a surprise to the upside would truly be a surprise, and a welcome one!
I continue to stay the course with our investment plan – plenty of cash on hand, sectors that tend to perform well in inflationary environments, and shock absorbers in our client’s accounts.
I am interested in your thoughts, comments, and questions!
Brittany N. Jarocki, CFP®
CERTIFIED FINANCIAL PLANNER™ Professional
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. Investing involves risk. Loss, including loss of principal, may occur. No strategy assures success or protects against loss. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.