Last week’s downturn and volatility put a nice dent in investor sentiment. The latest data from Investor’s Intelligence and AAII showed declines in bullish sentiment and a climb in bearishness. After a record 52 week reading just two week’s ago the Investor’s Intelligence survey showed a decline to 47% bulls. Despite the decline this is still a moderately high level of bulls.
The AAII poll is showing similar declines with bulls falling 2.3% to 36.6%. Charles Rotblut at AAII details the decline:
“The sovereign debt problems in Europe and the market’s recent volatility clearly moved some investors who were uncertain about the market’s direction into the bear camp. This is not surprising given that our surveys have been signaling a sense of cautious optimism on the part of individual investors. What is notable is that an equal number of investors expect stocks to fall as are optimistic that stocks will rise over the next six months. Even after two weeks of declines, bullish sentiment is merely 2.4 points below its historical average.”
Perhaps the most important question following last week’s temporary crash is not whether investors are bullish or bearish in the near-term, but whether the small investor is becoming increasingly hesitant to play a game that is looking more and more rigged and dangerous to them.
Source: AAII, II
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.