Direct Answer
The AAII Investor Sentiment Survey is a weekly poll of individual investors' expectations for the stock market over the next six months, producing bullish, bearish, and neutral readings. At historical extremes — bearish readings above 45–50% or bullish readings above 55% — the survey has demonstrated statistically significant contrarian properties: forward six-month returns have been above the historical average following extreme bearish readings and below average following extreme bullish readings. The Investors Intelligence survey of newsletter advisors provides a similar but more professionally-oriented reading with different historical thresholds.
Key Takeaways
- AAII surveys approximately 300–400 members weekly; the sample is small but has a 35+ year history, providing a long enough record for statistical analysis.
- The historical average AAII bearish reading is approximately 31%; readings above 45% are one standard deviation above average and historically associated with above-average forward returns.
- The bull-bear spread (bullish % minus bearish %) is often more useful than either reading alone; a spread below -20 (bears dominating by 20+ percentage points) is a strong historical contrarian signal.
- Investors Intelligence surveys professional newsletter writers — a more sophisticated sample — with contrarian thresholds at bulls above 60% (excessive optimism) and below 35% (excessive pessimism).
- Survey extremes have variable lead times: some resolve within 4–6 weeks, others take 3–6 months. They should not be used for precise short-term timing.
- Consecutive extreme weeks compound the signal: four consecutive weeks above 45% bearish carries more weight than a single week.
- The surveys measure stated opinion, not financial positioning — some investors may say they are bearish but remain fully invested, reducing the exhaustion argument that makes positioning data powerful.
- Combining AAII survey extremes with options-based signals (put/call ratio) and price action provides much higher confidence than using surveys alone.
Core Concepts
The AAII Survey: Methodology and Long-Run Averages
The American Association of Individual Investors has conducted its weekly sentiment survey since 1987, making it one of the longest-running investor sentiment data series available. Each week, AAII emails a survey to its membership base asking a simple question: "I feel that the direction of the stock market over the next 6 months will be: Up (Bullish), No Change (Neutral), Down (Bearish)." Results are published every Thursday morning on aaii.com. The survey sample size averages 200–400 respondents per week — small by polling standards but sufficient for detecting large directional shifts.
Long-run historical averages (since 1987): bullish approximately 38%, neutral approximately 31.5%, bearish approximately 30.5%. The bull-bear spread averages approximately +7.5 percentage points. Readings that deviate significantly from these averages — especially sustained deviations over multiple consecutive weeks — are the source of the survey's contrarian value. A single week with 42% bearish responses is mildly elevated; six consecutive weeks above 40% signals sustained pessimism that has historically been associated with market bottoms.
Historical Accuracy and Lead Times
Multiple academic and practitioner studies have examined the AAII survey's predictive properties. The broad conclusion is that the survey has contrarian properties at extremes, particularly on the bearish side. When bearish sentiment exceeds 50% — a reading that has occurred in roughly 5–7% of all weeks in the historical record — the forward 26-week (6-month) return on the S&P 500 has averaged materially above the unconditional average. When bullish sentiment exceeds 55% — occurring in roughly 8–10% of weeks — the forward 26-week return has tended to be below average, though the bullish extreme is somewhat less reliable as a timing signal because markets can continue rising even when optimism is high.
Lead times are variable and this is the most important practical limitation. Some instances of extreme bearish sentiment precede a market low by one to two weeks; others precede it by three to six months. The survey is not a precise timer — it identifies environments where the probability of positive forward returns is elevated, not the specific day or week of the market low. Using it alongside price-action confirmation (price stabilizing, reversal candles, breadth improvement) narrows the timing uncertainty.
Investors Intelligence: The Newsletter Advisor Survey
Investors Intelligence (published by Chartcraft since 1963) surveys roughly 150 stock market newsletter writers weekly, categorizing them as bullish, bearish, or expecting a correction. Newsletter advisors are a professional sample — they have real audiences and reputational stakes — but they are not capital-at-risk investors, making their signal different from options positioning. The Investors Intelligence bull-bear ratio and bull percentage have their own historical extremes: bulls above 60% signal excessive optimism (contrarian bearish), bulls below 35% signal excessive pessimism (contrarian bullish).
Historically, Investors Intelligence extremes have been associated with major market turning points. The bull percentage fell below 30% in March 2009 (one of the best long-term entry points in modern market history) and below 35% in late 2022 (the market's October 2022 low). Bull readings above 60% have appeared near the tops of 1987, 2000, 2007, and 2021. These are extreme examples — the survey has also had false signals and variable lead times. However, the historical record supports using these extreme readings as one input in a multi-indicator framework.
The Bull-Bear Spread as a Composite Metric
Rather than tracking bullish and bearish percentages separately, many practitioners use the bull-bear spread — the difference between the bullish percentage and the bearish percentage. When the spread goes deeply negative (bears outnumber bulls by 20+ percentage points), extreme pessimism is clearly dominant. When the spread is highly positive (bulls outnumber bears by 30+ percentage points), extreme optimism is present.
The spread condenses two readings into one metric and makes trend detection easier: a bull-bear spread that has been falling consistently for eight weeks shows steadily deteriorating sentiment regardless of whether it has hit any specific threshold. The spread also normalizes for secular changes in the average level of bullishness — if the unconditional average changes over time as the investor base shifts, the spread is less affected than the absolute bearish percentage.
Surveys vs Positioning Data: What Each Measures
A critical distinction separates survey data from positioning data. Surveys measure what investors say — their stated expectations. Positioning data (put/call ratios, short interest, ETF flows) measures what they do — their actual financial commitments. The two often align but can diverge. An investor who says they are bearish in an AAII survey might remain fully invested because they have no immediate plans to sell and recognize that timing the market is difficult. This partial decoupling between stated sentiment and actual positioning means survey signals can overstate the exhaustion argument: the extreme bearishness has not necessarily led to the actual selling that creates a real price floor.
This is why the most reliable setups combine survey extremes with positioning confirmation. When AAII bearish readings are above 45% AND the put/call ratio is elevated AND short interest is high AND fund flows show equity outflows, the survey extreme is supported by actual capital movement, strengthening the case that exhaustion is real rather than stated.
Worked Scenario: Interpreting a Multi-Week AAII Extreme
- Context: The S&P 500 has declined 18% over 12 weeks. The market has become a headline topic of fear — recession concerns, inflation data, and geopolitical uncertainty dominate financial media.
- Week 1 reading: AAII bearish: 46.3%, bullish: 22.8%, neutral: 30.9%. Bull-bear spread: -23.5. This is the first reading above 45% bearish in eight months.
- Week 2 reading: AAII bearish: 51.1%, bullish: 19.4%, neutral: 29.5%. Bull-bear spread: -31.7. Second consecutive week above 45% bearish. First time bearish has exceeded 50% since 2020.
- Week 3 reading: AAII bearish: 48.6%, bullish: 21.2%, neutral: 30.2%. Bull-bear spread: -27.4. Still elevated; three consecutive weeks above 45%.
- Investors Intelligence check: The concurrent Investors Intelligence survey shows bulls at 32% — the lowest in 24 months, below the historical contrarian threshold of 35%.
- Positioning check: The CBOE equity-only put/call 21-day average is at 0.83 (elevated). ETF flows show three consecutive weeks of equity outflows. These position-based indicators confirm that the stated survey pessimism is reflected in actual capital movement.
- Price action: The S&P 500 is showing declining selling volume over the past five sessions. The market has tested the prior low twice without breaking lower, forming a double-bottom pattern.
- Composite assessment: Three consecutive weeks of AAII bearish above 45%, Investors Intelligence bulls at 32%, positioning confirmation in options and flows, and price action showing diminished selling pressure. This is a high-quality multi-indicator setup for a potential medium-term reversal.
- Lead time acknowledgment: Even in this strong setup, the actual low could be one week away or eight weeks away. Position sizing and a clear stop level below the recent double-bottom low are essential for managing the timing uncertainty.
Measurement Framework
| Survey Metric | Long-Run Average | Contrarian Bearish Signal (fear extreme) | Contrarian Bullish Signal (greed extreme) |
|---|---|---|---|
| AAII Bullish % | ~38% | Below 25% | Above 55–60% |
| AAII Bearish % | ~30.5% | Above 45–50% | Below 20% |
| AAII Bull-Bear Spread | ~+7.5 pts | Below -20 pts | Above +30 pts |
| Investors Intelligence Bulls % | ~45% | Below 35% | Above 60% |
| Investors Intelligence Bears % | ~24% | Above 40% | Below 15% |
| Consecutive extreme weeks (AAII) | 1 week baseline | 3+ weeks >45% bearish | 3+ weeks >55% bullish |
Common Failure Modes
Using Survey Extremes as Precise Timing Tools
The AAII survey is a six-month outlook survey — its historical predictive properties operate over a 4–26 week horizon, not a 1–5 day horizon. Traders who buy immediately when AAII bearish hits 45% and expect a rally within the next two weeks are misusing the signal. The survey identifies an environment in which the probability of positive returns over the next six months is elevated — it says nothing about what happens in the next week. The appropriate holding period for a position entered on an AAII extreme signal should be measured in weeks to months, not days.
Treating the Survey as a Bear Market Bottom Signal
During sustained fundamental bear markets — 2000–2002, 2007–2009, 2022 — AAII bearish readings repeatedly hit extreme levels multiple times without producing lasting bottoms. Each temporary recovery following an extreme reading was followed by lower lows as the fundamental backdrop continued to deteriorate. Survey extremes work best in correction environments where the underlying fundamental trend is still positive and the selloff is driven primarily by sentiment overreaction. In true bear markets driven by earnings contraction, credit stress, or economic recession, the survey can stay at extreme readings for months while the market continues to decline.
Small Sample Extrapolation
The AAII survey's weekly respondent count is 200–400 — a very small sample for a nationwide population of investors. Statistical noise is inherent in any single week's reading. A 46% bearish reading one week followed by 38% the next doesn't necessarily signal a sentiment shift; it may simply reflect sampling variability in a small survey. This is why multi-week trends, moving averages of the reading, and confirmed extremes (two or more consecutive weeks at elevated levels) are more reliable than any single data point.
Ignoring the Neutral Category
The AAII survey reports three categories: bullish, bearish, and neutral. Much analysis focuses only on the bullish and bearish percentages, ignoring neutral. However, the neutral percentage carries signal: when neutral is very high (above 40%), it suggests that investors are uncertain and on the fence rather than firmly pessimistic, which is a different situation from extreme bearishness with low neutral. High neutral often accompanies periods of market indecision rather than the exhaustion that creates clean contrarian opportunities.
Comparing Across Survey Populations
AAII (retail individual investors), Investors Intelligence (newsletter writers), BofA GFS (institutional fund managers), and Sentix (European institutional and retail) survey different populations with different incentive structures, investment horizons, and analytical frameworks. Their readings have different historical averages and different extreme thresholds. Saying "all three surveys are bearish" is only valid if you're comparing each against its own historical extreme, not comparing raw percentages across the different surveys against a single threshold.
FAQ
When is the AAII survey published and where can I find it?
The AAII survey is published every Thursday morning at aaii.com/sentimentsurvey. The current week's results and historical data going back to 1987 are freely available on the site. The current reading, historical charts, and the bull-bear spread are all accessible without a paid subscription. Data in CSV format is available for download from the AAII website for members.
What is the Investors Intelligence survey and how does it differ from AAII?
Investors Intelligence surveys approximately 150 financial newsletter writers and market commentators, not individual investors. It has been conducted since 1963, predating the AAII survey by 24 years. Because newsletter writers have professional reputations and paying subscribers, their stated views carry more weight than a casual individual investor survey. The contrarian thresholds are different: Investors Intelligence bulls above 60% is considered excessive optimism, while bulls below 35% is considered excessive pessimism. The survey is published weekly by Chartcraft and its data appears in financial media and platforms including StockCharts and Investors Business Daily.
How reliable is the AAII survey as a contrarian indicator?
Academic and practitioner analysis generally finds statistically significant but imprecise contrarian properties. Studies by Clarke and Statman (1998) and multiple subsequent researchers find that extreme AAII bearish readings are followed by above-average six-month returns more often than not — roughly 65–70% of the time at readings above 50% bearish. This is a meaningful edge but far from certainty, and the remaining 30–35% of cases — where the market continued to decline despite extreme bearishness — often correspond to fundamental bear markets.
What is a "wall of worry" and how does it relate to AAII data?
A "wall of worry" describes a bull market that persists despite persistent bearish sentiment — investors keep worrying about various risks, but the market climbs anyway. AAII data can capture this: periods where bearish readings are persistently elevated (35–42%) but the market continues to rise slowly because the underlying economy and earnings are strong. This pattern distinguishes sentiment-driven bull markets (which tend to be sustained because there is always excess capital waiting to enter) from sentiment-overheated bull markets (where everyone is already bullish and fully invested, leaving little latent buying power).
How many consecutive weeks at an extreme level strengthens the signal?
Research and practitioner consensus generally holds that three or more consecutive weeks above a threshold significantly strengthens the signal. A single week above 45% bearish is mildly elevated and could reflect a transient news event. Three consecutive weeks above 45% signals sustained pessimism that cannot be explained by a single passing event. Four or more consecutive weeks represents the kind of entrenched negative sentiment that historically has been most reliably associated with subsequent market recoveries. Some practitioners use a four-week moving average of the bearish percentage to smooth out single-week noise.
Does the AAII survey work differently in bear markets vs corrections?
Yes, significantly. In corrections within an ongoing bull market (declines of 10–20% that reverse to new highs), AAII extreme bearish readings have been strong contrarian signals with typical resolution within 4–12 weeks. In true bear markets driven by fundamental deterioration (2000–2002, 2007–2009, 2022), the survey can remain at extreme bearish readings for many months while the market continues to fall, because the pessimism reflects accurate fundamental assessment rather than sentiment overreaction. The key discriminator is the fundamental environment: if earnings are contracting, credit spreads are widening, and the economy is in or near recession, treat survey extremes with more caution than in fundamentally sound environments.
What other investor surveys are worth tracking?
Beyond AAII and Investors Intelligence, other useful surveys include: the National Association of Active Investment Managers (NAAIM) Exposure Index, which surveys active equity managers about their net equity exposure (0–200% scale, readings below 20 signal defensive positioning); the Sentix Global Investor Survey, which covers European institutional and retail sentiment; and the Conference Board Consumer Confidence Survey, which while primarily an economic indicator also reflects the sentiment environment. The BofA Global Fund Manager Survey covered in the institutional flows guide is another key resource for the professional money manager view.
Should I use the AAII bullish or bearish reading as my primary signal?
Research consistently finds that the bearish reading has stronger contrarian properties than the bullish reading. Extreme bearish surveys are better predictors of subsequent positive returns than extreme bullish surveys are predictors of negative returns. The practical reason is that markets tend to fall faster than they rise, making recovery from extreme fear faster and more reliable than the slow erosion from extreme complacency. Both readings are useful, but if you are tracking only one, track the bearish percentage and the bull-bear spread.
Sources
- AAII Investor Sentiment Survey — American Association of Individual Investors
- Investors Intelligence Sentiment Data — Investors Business Daily / Chartcraft
- NAAIM Exposure Index — National Association of Active Investment Managers
- Sentix Global Investor Survey — Sentix GmbH
- Consumer Confidence Survey — The Conference Board
Disclaimer
This guide is for educational and informational purposes only and does not constitute investment advice. Investor sentiment surveys are not reliable short-term market timing tools and their historical contrarian properties do not guarantee future performance. Always use multiple indicators and consult a qualified financial professional before making investment decisions.