Longest Bearish Streak In Retail Investor Sentiment Since 1987

Despite the recent rebound in the S&P 500 Index, which is up almost 45% from the March lows and just shy of 5% off of all-time highs, retail investor sentiment hasn’t rebounded like it has in the past.

This American Association of Individual Investors (AAII) retail investor sentiment survey asks individual investors to answer the question: “I feel that the direction of the stock market over the next 6 months will be,” to which they can select “bullish” or “bearish” or “neutral” as a response.

The AAII survey has shown more bears than bulls for the past 23 weeks, the longest streak on record since it began in 1987 [Figure 1].

Because this particular measure of retail investor sentiment typically follows recent market returns, it has tended to be a contrarian indicator. In other words, retail investors tend to be bullish after a strong run in stocks, and bearish after a recent sell-off. The fact that investor sentiment remains so negative tells us that the current equity market remains a hated one. 

Are retail investors under positioned?

Assuming people put their money where their mouth is, or invest based on their outlook, investors today are likely under positioned. That means continued equity strength could follow if negative retail sentiment shifts more positively. But with the state of the virus in the U.S., that may be a tall order until some type of pharmacological remedy is found.

To download a copy of this commentary, click the button below.

Download The Big Number

To discuss how we can empower you please contact us at 866.371.2399 ext. 202 or info@horizoninvestments.com.

Nothing contained herein should be construed as an offer to sell or the solicitation of an offer to buy any security. This report does not attempt to examine all the facts and circumstances that may be relevant to any company, industry or security mentioned herein. We are not soliciting any action based on this document. It is for the general information of clients of Horizon Investments, LLC (“Horizon”). This document does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any analysis, advice or recommendation in this document, clients should consider whether the security in question is suitable for their particular circumstances and, if necessary, seek professional advice. Investors may realize losses on any investments. It is not possible to invest directly in an index.
Past performance is not a guide to future performance. Future returns are not guaranteed, and a loss of original capital may occur. This commentary is based on public information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. Opinions expressed herein are our opinions as of the date of this document. We do not intend to and will not endeavor to update the information discussed in this document. No part of this document may be (i) copied, photocopied, or duplicated in any form by any means or (ii) redistributed without Horizon’s prior written consent.
Other disclosure information is available at www.horizoninvestments.com.
Horizon Investments and the Horizon H are registered trademarks of Horizon Investments, LLC
©2020 Horizon Investments LLC
You are now leaving this website to go to HorizonMutualFunds.com