In my ongoing discussion about the mass psychology associated with the market, I believe we are in the early-stages of the “acceptance” phase. However, acceptance of a rally by the majority of insitutional investors is far from a euphoric phase, where individuals who normally do not follow the market closely are dishing out stock tips to you in line at the grocery store. Towards the top of a bull market, we tend to see that euphoria come back.
Until retail investors come back, and come back for a while, start having success and grow euphoric, I am reticent to look at each down day as a sign of a major market top.
Over at AllStarCharts.com, J.C. Parets has a good post up today supporting that notion.
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Looks to me like they’re not buying into this bull market, at least not yet. The S&P500 has more than doubled in 3 years. But the individual investor is still disgusted and could care less.
According to the good folks at Bespoke Investment Group, “It seems as though no matter what the market does, individual investors remain reticent to embrace the bull market. With the exception of just one week in February, the weekly bullish sentiment survey from the American Association of Individual Investors (AAII) has been under 50% for the last year!”
Even with the S&P500 making fresh Bull Market highs this week, the most recent survey shows that bullish sentiment dropped again from 45.6% down to 42.4%:
Good points again, Chess.
People I know mostly have their IRAs in the market, since they are assuming that even if the market crashes, it will go back up before they end up needing to take the money out. This is true even of retired people with substantial savings, outside of their IRAs, that they can live on for a number of years.
But no one seems to be putting non-IRA money into the market like in 1999.