Because man is a sentimental animal, he considers everything from an emotional rather than a practical standpoint, and the stock market is no exception.
For example, if the price of one of the shares is rising rapidly and everyone is talking positively about it then a sentimental person will attempt to purchase those shares. In order to buy the stock using the sentiment, he often buys that stock at the highest price.
From the above example, it will be quite clear to you that how sentiment plays a major role when it comes to investing and trading in the stock market and that’s why various companies conduct so many surveys related to sentimental investing amongst the various people on different platforms and later on publish the results of that particular surveys on a regular time.
AAII Sentimental Survey
The American Association of Individual Investors (AAII), a nonprofit education group, has been conducting weekly surveys since July 1987 and polls or asks their members whether they think stock prices will rise, remain essentially flat, or fall over the next six months.
Results of the survey are compiled on a weekly basis (Thursdays) at the AAII website and are also published weekly in Barron’s. Weekly basis results are the best part of this survey I think and that’s why so many people follow it too.
The special thing about this survey is that only those people can participate in it, who have at least a graduate degree, who have good knowledge about the market, and whose portfolio is having a trading value of more than 5 lakh USA dollars.
Overall, we can say that this survey is for those people who have been investing their money in the market for a very long time and who have also got a very good return on their investment.
The best thing about the AAII survey voting is that only the registered users on this platform can cast their vote and there is no if and but available for the new investors who don’t meet the voting criteria.
According to this website, people’s sentiments play a vital role when they are investing their hard-earned money into the market and it also gives direction to the company that what potential investors are thinking about their business.
Classification of Sentiments According to AAII
Well, AAII has classified the people’s sentiments while investing in the 3 major types. This classification is as follows.
- Bullish Sentiments
- Neutral Sentiments
- Bearish Sentiments
So, when it comes to the Bullish Sentiments the investors actually have a though process in their mind is that the particular stock’s price will increase over a period of a time of 6 months.
Ultimately this type of sentiment is adopted by those people who are highly optimistic about their investment.
In neutral sentiment, an investor is believed to remain neutral and have a thought process that the stock prices will neither go up nor it will face loss over a period of 6 months.
Their common conception about any particular stock’s price is that it will remain flat for the above-mentioned period.
When the investor has a perception that the market is actually in negative sentiment and the prices of the shares will face decline then we can call that particular sentiment as Bearish Sentiments.
Usually, only those people keep such thinking who are literally very negative perceptions about the growth of the market and people who are pessimistic in nature.
Final Point on AAII Sentimental Survey
The historical average which was noticed till now about each and every sentiment has been recorded till now is written below.
Bullish Sentiments – 39%
Bearish Sentiments – 31% and
Neutral Sentiments – 30%
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