II says everyone’s bullish, AAII says more Bears than Bulls and NAAIM is somewhere in the middle. Now what?
In reality, none of the surveys above tells the full story on their own!
An evidence-based approach to sentiment analysis starts with a framework that considers the breadth and reliability of multiple indicators rather than relying on a few that confirm your bias. At Sentiment Matters, we use and back-test more than 500 sentiment indicators across asset classes to provide a more balanced, data-driven view of where investor sentiment truly stands.
One of the most common behavioural pitfalls in investing is cherry-picking — focusing on the data that supports your existing view or position while ignoring what doesn’t. It’s especially tempting when it comes to sentiment.
There are hundreds of sentiment indicators from dozens of sources, and inevitably some will point in opposite directions. At any given time, you can find indicators suggesting investors are overly bullish — implying you should be short — and others showing deep pessimism, suggesting you should be long. Without a consistent framework, it’s easy to fall into the trap of highlighting only the ones that fit your narrative.
So where does that leave us on Investor Sentiment today? Our overall assessment of Investor Sentiment is clearly bullish, but not yet “warning sign” territory.
