Sentiment indicators from the AAII (individual investors) and Investors Intelligence (newsletter writers) indicate that stock market sentiment is at historically high levels, and has been for a while. However, whenever I discuss stock markets with people – ranging from private investors to institutions to journalists – most of them seem to be more concerned about a looming correction in the near term than being bullish. Maybe it is just a question of communicating with different people from those participating in the surveys, but anecdotally I do not observe particularly bullish sentiment.

In order to cast light on this issue, I proceeded to run my own survey to try to get a feel for how the readers of Investment Postcards and The Big Picture (Barry Ritholtz’s blog) see matters. 4,004 people participated in the poll, resulting in the numbers in the table below.

The comparative numbers show the following:

  • The Investment Postcards Survey had fewer bulls and significantly more bears than the AAII and Investors Intelligence Surveys. The number of neutral votes were much the same.
  • The Investment Postcards Survey actually had more bears than bulls, resulting in a bull-bear spread completely opposite from that of the other surveys.

Source: AAII; Investors Intelligence; Investment Postcards.

The results of the Investment Postcards Survey support my anecdotal observation that most people I talk to seem to be fearing a correction/pullback rather than be bullish. I have absolutely no idea why the results of my survey are so different from the others as all the surveys polled people with some interest in the stock markets and mostly from the U.S. The questions were also the same and the six-month investment horizon the same as that of the AAII. (I do not know the time period used by Investors Intelligence.)

The number of participants in the AAII and Investors Intelligence Surveys were not disclosed, but I assume they are representative samples. Although 4,004 participants are not a particularly large number, I am of the opinion that it is large enough to show a pattern. The Investment Postcards Survey closed four days (including two trading days) after the others, but this should have increased the bulls/reduced the bears as market sentiment was quite upbeat over those days.

What now? I am tempted to run my survey on a continuous basis for the simple reason that the results seem to support my intuitive feel to a much greater extent than that of the AAII and Investors Intelligence Surveys. But this is where I need your help on the interpretation of the results. Am I missing something somewhere? Where is the flaw in the logic? Is sentiment in reality not as overbullish as the other surveys show? Please post your remarks in the comments section of the post so that we can get the debate going.

Category: Psychology

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

38 Responses to “Poll Results: Sentiment — Have the Bulls Disappeared?”

  1. constantnormal says:

    Or does the Investors Postcard informal survey discredit the long-standing and narrowly-focussed AAII and Investors Intelligence surveys? I say “narrowly-focussed” due to the potentially broader reach of the Investors Postcard survey vs the members-only approach of the other two. (at least, that is my guess as to the population their samples are taken from).

  2. constantnormal says:

    Or has the fundamental character of the markets changed such that we really should be polling the various software facilities as to what they “think”?

  3. constantnormal says:

    For the record, I found it to be a difficult survey, with me finally having to interpret it as asking did I believe that the market would be higher/lower/essentially unchanged at the end of the interval in question. Which was not quite what was asked.

    The “wall of worry” seems to be firmly in place, however. No telling how that will play out.

  4. gregh says:

    Are the questions and contexts identical?

    Don’t forget that an intuitive feeling and having to verbalize that feeling can come across very differently. People can easily feel one way, but when they actually analyze and try to describe a feeling or justify an answer something very different can wind up written down on the paper.

  5. gman says:

    Sentiment in my shop is at best …grit your teeth and buy to more likely out right bearish for the 6month time frame. In terms of the lay public it is hard to find someone who is not still scare stiff!

  6. rip says:

    I don’t know enough to know which samples are truly “random”, or significant by virtue of the responders.

    I would not consider your readers a random sample.

    But I do know honest, objective responses are hard to generate or come by.

    FWIW, I responded to your survey bullish, simply because as long as the market drivers, GS and the Fed’s QE2 are doing their PPT thang. It’s gonna keep on keepin on.

    Until they, and not the fundamentals, choose to dump.

    And they’ve probably grown a lot more sophisticated with that since the flash crash.

    Undetectable suits their purposes best.

  7. scorp99cam says:

    I think most of the difference is based on the population samples. Visitors to economic blogs tend to be more bearish than the general population, and I would guess the AAII would tend to be more bullish than general population. Just my thoughts.

  8. machinehead says:

    Shouldn’t the sentence immediately above the chart refer to ‘The Big Picture’ survey? [not to 'Investment Postcards,' described in the previous sentence]

    What does ‘Plexus’ mean in the chart — does it refer to The Big Picture survey? [in which I voted neutral]

    Thanks …

  9. KT9 says:

    I think that the Postcard survey is perhaps measuring the opinion of a different set of people than the AAII or II surverys. You cannot compare them really without knowing who voted in the Postcard poll. One cannot assume that the type of people who read Postcard are the same type of people that are subscribers to AAII (primarily small individual investors ) or write write newsletters (in the case of II).

    Perhaps you should add a set of check boxes to your poll to determine who is voting so that you can break down the results by type of voter.

  10. DeDude says:

    I think TBP has a substantial overweight of bears. Barry called the problems before the crash and attracted a lot of bears back then. I voted bullish for the next 6 months although not with great conviction (I am more like 50:30:20 between Bull:Neutral:Bear), and I think we will get below 1000 within the next 2 years.

  11. Gulfcoastm says:

    I suspect that a large portion of your readership is narrowly focused, as mentioned above. Your website offers some of the absolute best writings on the internet and I suspect that your readers that stay with the site longterm have to be a little more skepitcal to have stayed in the game over the last several years. The other writers on this site also lean to the negative side of the ledger and I think continually reading this has its influences.

    I think myself along with others see major train wrecks coming and we are nervous as to the eventual timing of the events. 6 month – 6 years who knows.

    I just hope everyone makes money along the way – not realistic I know

    I would keep up the survey for a few years at least to see what it might tell you over time. You might learn something that you aren’t even planning on.


  12. SANETT says:


    Gremlin #1: [repeated phrase while on telephone in stock exchange] BUY! BUY! BUY!
    Gremlin #2: [repeated phrase while on telephone in stock exchange] SELL! SELL! SELL!
    Brain Gremlin: [on telephone] Well, it’s rather brutal here. Right now we are advising all our clients to put everything they’ve got into canned food and shotguns.

  13. GYSC says:

    I would say most are bullish as long as the trend holds, but under the surface most are aware this market has a preternatural bid underneath it and will not want to be late to the exits.

  14. Investradamus says:

    My problem is reconciling what I think the market should do, versus what I think it will do. I think there should have been a significant correction awhile ago but it has yet to show itself. In the era of Helicopter Ben and the perpetual market melt up, I am inclined to say that until the trend visibly changes, it will continue to increase and defy logic and fundamental analysis, regardless of where I think it should be headed if reality ever kicked back in.

  15. JaundicedEye says:

    Robert Prechter is a famous Elliot Wave trader. I heard him on Bloomberg with Tom Keene. He uses something called Trade Futures Daily Sentiment Indicators, which in December was at an all time high. I dunno, its a subscription service.

  16. parsec says:

    Your time frame was six months. I look for a continuation of the bull move until as late as March with the bears taking over until the S&P is back to about where it is now. So I chose “sideways.”

  17. seneca says:

    A more revealing poll might be to ask what percentage long someone currently is in the stock market relative to their maximum bullish position. In other words, if they would normally invest $100,000 in the stock market when they are totally bullish but have $60,000 in the market now, they would answer “60 percent.”

    I say this because many people are trend followers and a trend follower doesn’t predict the future. A trend follower has no idea whether the market will be up or down six months from now, but he will stay invested as long as the trend is up.

  18. Andy T says:

    Your sampling of people are much different here. The “name” of the surveys are a “giveaway”…they contain the term “Investors.”

    They’re asking people that want to “believe” and “invest.”

    Whereas, on this blog, you’ve got a bunch of “traders” who don’t give a shit one way or another. Or you’ve got “shorter term” investors/traders that don’t believe the tape/trend, but are willing to keep buying it anyway.

    One thing I can “feel” out there is a mountain of people that want to short/sell this thing, but who are waiting for some weakness first. When the S&P does start to crack a bit, I think you’ll see some serious selling momentum pick up.

    In the meantime, it has been a “bear grinder,” so why get in the way?.

  19. wally says:

    It is pretty difficult to believe that a market that the general public is essentially boycotting is “too bullish”.
    It isn’t enough to measure a one-dimensional stat. Who’s in and who’s out is important, too.

  20. El Viejo says:

    People lie.

    They will give one answer on a written survey and another verbally.

    People (in this country at least) do not want to be “recorded” as being negative.

    Your population is who? Do they want to tip things negatively?

  21. Julia Chestnut says:

    Watch out for the feedback loop, BR. Remember that the feeling you have might have to do with the people that you listen to and attract. The commonality of interest sometimes creates a commonality of opinion in ways that are difficult to place on the causation/coincidence scale.

    It’s interesting to know you are right about what those around you think, but I am always looking for the people I wouldn’t talk to and the ideas I haven’t had because it keeps me thinking.

  22. gremlin says:

    I went to cash last year when the transocean rig blew up last year, I went to sell my RIG shares and sold everything else too while I was there, just couldn’t stop clicking. I got back in during the summer when VZ and apple seemed cheap, started clicking and kept buying. Last week everything seemed peaky, now the bad news is out and when the qqq’s dive with appl tomorrow everyone is going for doors. Events trigger sentiment is my theory. My inner gremlin agrees.

  23. contrabandista13 says:

    I pay little or no attention to surveys… Especally when related to sentiments…. However having said that, it comes to my attention that a “bull market” (please use your own definition) with little busllish sentiment is very vunerable to a sharp and severe reversal…..

    As bearish as I am, I have been jobbing this beast from the long side, on the few occassions that I have done short flyers, I gotten burnt. I’m not ready quite yet to make a serious comitment to the short side. Eranings season is a very “weird” time to do so…. Equities are on my front stove and I’m watching them closely, the way that a chef observes a Picata. It’s all about the timing….



    You sound a little confused….. Wellcome to the club….. :-)

    Best regards,



    BR: Note the by line of the writer in the top right of each post . . .

  24. Bentrider-MI says:

    I’m a member of AAII and its survey is based on a weekly response by the members who receive a weekly email on the events effecting the markets and it is purely voluntary. Having studied statistics I know that its survey doesn’t represent a scientific sample, but it is a sample of those of us who study the markets, try to make our own informed judgments as what to invest our money in and how we are going to balance our investments between stocks, bonds, cash. Although I am retired and therefore more conservative than younger investors, when the market went through the G.W.Bush crash I foresaw the coming bursting of the real estate bubble (you had to be blind when you saw mortgage companies advertising no money down, payments that didn’t even cover the interest fo five years, and even loans were people didn’t need a job, any assets, or anything to qualify and not see the bust coming) I wouldn’t touch these bonds or the “insurance” being sold against these bonds failing since our idiot Congress repealed the “Bucket Shop Law” passed under Teddy Roosevelt! However, when the market crashed, I was holding only high quality large cap stocks and unlike many of my fellow teachers I didn’t sell my holdings. Currently the value of my stock holdings are nearly back to what they were worth before Bush’s Great Recession! Given the levels of earnings by the large caps I feel bullish about the next year because I think the recovery will continue unless the new House of Representatives is stupid enough to screw it up.

  25. mtlco says:

    There are three kinds of bulls,

    Leveraged bull
    Happy bull
    Covered bull

    Which one is buying?
    If you picked the third one there isn’t some flash crash coming soon and the actual trend up will probably go on.

  26. nofoulsontheplayground says:

    I was bearish for 6-months only because I anticipated a peak soon, a re-test of the highs in March, and a drop into mid-summer, followed by a recovery into the end of 2011 to new highs.

    Of course, I anticipate a bearish 2012.

    I think the key overhead resistance levels we will be looking at in 2011 are in the 1360 SPX range. For the first half of 2011, I believe we are likely to spend much of our time in a trading box that runs between 1219 SPX and 1320 SPX. That 1219-1229 SPX area at the very least needs to be back-tested.

  27. bear_in_mind says:

    I’d say I’m neutral with a defensive posture. Decided in July to return to dollar-cost-average new monies into a mix of managed mutual funds and buying into the dips. However, majority of my holdings are in guaranteed-return mutual fund (fixed 3.8 percent) keeping my powder dry. When the next major correction occurs, I’ll have ample assets ready to purchase equities on my buy list.

    Lots of external variables popping up on the radar… I’m expecting the unexpected. Think it’s a coin-toss whether we see a melt-up, stall-out and plunge, or go sideways.

  28. bear_tracks says:


    Interestingly, my forecast for the market is very close to the one written by nofoulsontheplayground, and this is one more datum that indicates that the characteristics of the audience responding to your survey is different from those representing the other surveys. You are my favorite blogger, and I read your blog everyday. Of course, I do read other blogs, but there are only a few bloggers for which I would bother taking the time to answer a survey (and even fewer that I would take the time to write a comment). I would also guess that serious blog readers are less likely to be influenced by mainstream media. And, so, yes, I agree with several other of your responders in that the results of your survey are from a certain type of population.

  29. Clem Stone says:

    I think many people vote the opposite of what they actually hope/believe as a way to influence the contrary indicator.

  30. mbelardes says:

    Everyone keeps talking about this looming correction. I agree with the premise that after the run from March 09 the market typically has a ~20% correction and that we have not yet seen it.

    But where is it? When is it hitting? I went 100% invested in August, sold 50% on 12/31 (adios gold/silver and stayed heavy in energy), did two weeks of research and I’m ready to reallocate … but I’m sorta holding off expecting the correction that a lot of number crunching backs up. C’mon now!

  31. Agsakkal says:

    2 possible explanations:

    1) AAII, II surveys are supposed to reveal market expectations 6 months out. In reality, however, they are usually reliable indicators only 3 to 4 weeks into the future. They don’t have predictive power 6 months out. Maybe, BR’s survey is different in that way and is a contrarian indicator for market performance 6 months from now as it was meant to be ?

    2) Somewhat hard to believe, but maybe, followers of BR’s blog should be categorized under smart money rather than retail crowd and results should be interpreted in similar vein as are OEX put/call ratios, commercial hedger positions in equity index futures and similar non-contrarian indicators. Anyway, time shall tell – I guess, we will have to wait for at least 6 months to know the answer …

  32. safe haven says:

    Barry: Another explanation for the deviation could be a) your readers tend to be more focused on capital market activities and / or b) could come from a wider or more broad global distribution ( readers). The AAII & Investors Intelligence surveys could simply not be as “focused” (i.e. have their own capital – sometimes substantial ) at risk everyday and, therefore the positive sentiment is easier to justify ( with less daily exposure in equity markets).

  33. safe haven says:

    Sorry Barry – 1 other thought before I have to get onto to work over here – the difference highlighted in your survey may also be similar to what appears to be driving stock market gains these days —– i.e. have you noticed how consumer disretionaries seem to leading the big rally ? Here, names like Richemont and Swatch have been on fire — as in the U.S. where about 20% of income earners own about 80% of equity wealth — perhaps more of the people that read and listen to your views tend to be from the upper income brackets while, the broader more generalized surveys take in a view of the wider segment of the U.S. population that hasn’t improved it’s situation alot over the years and, arguably is in a more difficult situation today than 5 years ago….Gotta Run…KEEP UP THE GOOD WORK. Read your stuff as my morning cup of coffee over here. Regards.

  34. Hugh says:

    Right now I am in agreement with those who say we are in a Sideways Market. We will see a series of Bull and Bear moves that may be sustained for many months – but without breaking out into new, higher territory.

    I would expect that changes from Bull to Bear would be caused by horrible news related to the credit crunch workout or to China imploding – but there could be other causes too.

    We are now on a Bull leg of this ride and I will happily invest in stocks that are trending upwards. I will rapidly exit anytime I think that the trend has broken.

  35. rnspiess says:

    My sentiments haven’t changed much. I remain edgy. Money printing will be good for stocks until it ceases to be. Thus I am moderately bullish for the next six months.

  36. Cynic_FA says:

    Your poll of readers of The Big Picture is a measure of the extreme bearish crowd you attract. Way too many readers of Bailout Nation belong to the David Rosenberg school of “The Sky is Falling”. Look back at any of the what do you think threads from August and September 2010 and you will see that most of the posts were about why the economy still stinks and the market will fall back to reality any day now.

    Ask yourself if your informal survey of friends and acquaintences is biased by the David Rosenberg element you hang out with.

    Who out there is really a bull? I mean Presendential Year Cycle up 40% to 50% from the 2010 kind of screaming bull. Presidential Year Cycle says Dow 14,000 – can I get an Amen?

  37. Kerk says:

    Like other, Id say sample bias. Belong to the same biased crowd myself.

  38. dancingdiva says:

    I am not at all surprised with the poll results. When reading investment sites like this one or Seeking Alpha the comments are predominantly negative.

    I paid too much attention to that bearishness for awhile, letting fear cloud reason. Now, while I continue to read the sites, I’m much more critical in my views.

    Too many seem to be fighting the last war, getting caught by the big downturn and continually looking for reasons for it to reoccur. While I have one foot out the door and one finger on the sell button at all times I’m trying not to be blinded by the fear, but always open to the possibility of another big correction.

    Today I don’t see the reason – but ask me in a few days – I may change my opinion.