FYI: The dour mood of individual investors continued once again this week as the latest sentiment poll from AAII showed another sizable drop in bullish sentiment. In this week’s survey, bullish sentiment declined from 32.86% down to 26.92%. There’s not much to say here besides the fact that bullish sentiment has been below 50% for a record 126 straight weeks.
Regards,
Ted
https://www.bespokepremium.com/think-big-blog/bullish-sentiment-declines-again-2/
Comments
"The failure of sentiment to work perfectly (as a market timing tool) highlights two important points. Though correlations between sentiment levels and market direction have appeared in the past, the AAII Sentiment Survey does not predict future market direction. Overly optimistic and pessimistic investor attitudes are characteristics of market tops and bottoms, but they do not cause stock prices to change direction. Rather, it is changes in expectations of future earnings and economic and valuation trends that move stock prices. The timing of such changes has proven to be difficult to predict with accuracy.
This leads to my second concluding point: Never rely on a single indicator when forecasting market direction. Rather, consider a variety of factors—including prevailing valuations, economic data, Federal Reserve policy, government policies and other prevailing macro trends—and allow for a large margin of error in your forecast. As the saying attributed to John Maynard Keynes goes, the market can stay irrational longer than you can stay solvent."
http://www.aaii.com/journal/article/is-the-aaii-sentiment-survey-a-contrarian-indicator
Regards,
Ted