A Near Record Low For Individual Investor Bullishness

Insights | A Near Record Low For Individual Investor Bullishness

Author: David I. Templeton, CFA, Principal and Portfolio Manager

This week's individual investor Sentiment Survey release by the American Association of Individual Investors shows the percentage of investors expressing bullishness on stocks over the next six months is near a record low at 15.84%. This is the ninth lowest reading for the weekly survey's bullishness sentiment going back to 1987.

AAII Bullish Sentiment Reading as of April 14, 2022

The spread between the bullish and bearish readings equals -32.6 percentage points and has reached wider negative levels in the past; however, this week's reading is near the spread level reached during the 2008/2009 financial crisis. In fact, the spread equaled -32.8 percentage points for the survey released during the week of November 20, 2008 when the S&P 500 Index traded at 806.58

AAII bull bear spread as of April 14, 2022

As I often remind readers, the sentiment measures are contrarian ones and are most actionable at their extremes. And as the following chart shows, forward 12-month returns tend to be higher when bullish sentiment is at an extreme low level.

AAII bullish sentiment and S&P 500 Index 12-month forward return

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