MARK-TO-MARKET: Stock market soars, investors are confident but cautious

MARK-TO-MARKET: Stock market soars, investors are confident but cautious

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Founded in 1978, the American Association of Individual Investors (AAII) is a Chicago-based company that provides research, education and insights for individual investors. Its weekly sentiment survey tracks the pulse of near-term optimism in the US stock market among the individual investor community. The goal is to provide a forward-looking perspective by asking them their opinion on the stock market over the next six months.







Mark M. Grywacheski


Kevin Schmidt



In the latest survey, 43.2% of investors say they are “optimistic,” a Wall Street term that denotes optimism. This means that investors believe that the stock market will continue to rise over the next six months. This is above the survey's historical average of 37.5%.

In contrast, 27.2% of investors are “bearish” and believe the stock market will fall in the next six months, a high close to four months. This is notably higher than the 21.9% reported last week. Meanwhile, 29.6% of respondents said they were “neutral” – that the stock market would remain relatively unchanged over the next six months.

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If you've always wondered about Wall Street's fascination with bulls and bears and their frame of reference, here's a simple clue. The bulls advance (a rising stock market) and the bears go to sleep (a declining stock market).

The latest sentiment survey indicates that investors generally remain optimistic about the near-term outlook for the US stock market. However, the growing “bearish” outlook indicates growing concern that stock prices over the past 16 months may have risen too much, too fast.

The survey also reflects the rollercoaster that investors have experienced in recent years. In 2022, concerns about high inflation and rising interest rates caused major stock indices to decline. That year, the tech-heavy NASDAQ fell the most, 33.1%. The broad S&P 500 fell 19.4%, while the Dow Jones Industrial Average (DJIA) fell 8.8%. In December 2022, the AAII reported that bullish investor sentiment had plummeted to just 20.3%. Bearish sentiment, however, shot up to 52.3%.

But 2023 provided a much-needed boost for investors. Last year, the NASDAQ soared 43.4%, the S&P 500 gained 24.2% while the DJIA rose 13.7%. So far in 2024, all three stock indices have continued their rise and are currently at all-time highs.

It is unknown whether the current stock market rally continues or not. That is the kingdom of crystal balls. According to the latest sentiment survey, many investors believe this will be the case. But that optimism is increasingly tempered by a dose of caution. The economy still faces high inflation and high interest rates. This is a powerful combination that can potentially affect the growth of the US economy and stock market.

Google has temporarily stopped its new artificial intelligence model, Gemini, from generating images of people. This comes after he faced criticism for portraying historical figures such as politicians and German soldiers from World War II as people of color. Google has recognized the need to make adjustments to Gemini, which had been generating images with different ethnicities and genders. “We're working to improve these types of representations right away. Gemini's AI imaging generates a wide range of people. And that's generally a good thing because people all over the world use it. But it misses the mark here. white,” Google said in a statement. The move comes amid ongoing concerns about bias in AI, with previous examples showing negative impacts on people of color. As efforts to mitigate bias continue, experts emphasize the complexity of the problem and the need to continually improve AI technology.

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Mark Grywacheski is a financial markets and economic analysis expert and investment advisor with Quad-Cities Investment Group, Davenport.

Disclaimer: The opinions expressed herein are subject to change without notice. Any prices or quotes contained herein are indicative only and do not constitute an offer to buy or sell securities at a particular price. The information has been obtained from sources deemed reliable, but we do not guarantee that the material presented is accurate or that it provides a complete description of the securities, markets or developments mentioned. Quad-Cities Investment Group LLC is a registered investment advisor with the U.S. Securities Exchange Commission.

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