Taps Coogan – June 30th, 2022

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The following chart, via Tiho Brkan, details the American Association of Individual Investors (AAII) Bears Index. It shows the percentage of respondents to a sentiment survey that report a bearish outlook for market returns.

For the week ending June 22nd, the results showed 59.3% of respondents showing a bearish outlook. That represents the highest percentage of bears (baring a 59.4% reading in April) since the absolute depths of the Global Financial Crisis when the S&P 500 was down over 50%, several of the world’s largest financial intuitions had failed or come close to failure, the unemployment rate was above 8%, and the global economy had been in recession for over a year.

Sentiment was roughly this bearish right before the most intense part of the late-2008 selloff started and then got even more negative in the spring of 2009, so don’t doubt that things can get worse. Indeed, without capitulation lows or a monetary policy pivot yet in sight, it seems reasonable to assume things will get worse, but sentiment is already reflecting quite a bit of bad news.

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