Investors keep it real about stocks

As February 2018 winds down, stock investors don’t seem to be panicking over the price gyrations and higher volatility experienced earlier in the month.

It has been a while since investors have dealt with such choppy markets, in my view.

At one point this month, the Dow Jones Industrial Average fell more than 1,500 points during a single session.

That said, the Dow and S&P 500 Index are up about 1% for the year as of February 22.





Investor Sentiment

In my view, investors are far less bullish about stocks than at the start of the year.

In January, roughly 60% of investors were bullish on stocks, according to the AAII Sentiment Survey.

That has since fallen to 44.7%.



However, bullish sentiment remains above the historical average of 38.5%.

In my opinion, investors were far too optimistic early in the year as valuations climbed to unsustainable levels.

I think investors now seem more cool-headed, but are still optimistic in historical terms.


In my view, investors don’t seem to be panicking about higher volatility or the recent technical correction.

Furthermore, that wasn’t the first 10%-plus correction in the current bull market. We experienced the fifth technical correction in a stock rally that’s up nearly 300% since March of 2009.

In my opinion, investors seem to be taking that lesson on board based on the sentiment data.


Photo Credit: Sam Valadi via Flickr Creative Commons

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Xavier Brenner
Xavier Brenner
Xavier Brenner has covered global market, business and economic trends for Interactive Brokers Asset Management since 2013. An experienced financial journalist, Brenner offers analysis and insights on the stories that matter to the discerning investor.