Sentiment readings were mixed this week with the Investor’s Intelligence Survey turning even more bearish while the AAII’s survey of small investors showed a sizable jump in bullishness. Bullish sentiment among small investors jumped 10.1% while the II survey showed a decline of 3.9%. AAII says the ISM data and subsequent rally accounts for the change in sentiment:
“The improvement in bullish sentiment comes on the heels of a strong stock market advance during the first trading day of September. Investor sentiment is often influenced by recent stock market action. A fall in the percentage of bearish and neutral investors accounted for the 10.1 percentage point increase in bullish sentiment. Bearish sentiment remains 11.4 percentage points higher than bullish sentiment.”
These readings are similar to the recent allocation readings we saw earlier this week as small investors turn a bit more bearish than their institutional counterparts.
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.