Citi: Actually, Everyone's Still Bearish

Citi highlights in a global macro piece how U.S. retail investors remain bearish despite the rally we’ve seen so far this year.

This lines up pretty well with mutual fund flow data, whereby bonds have been the favoured asset class this year. Citi’s data comes from the American Association of Individual Investors.

While choppy, the blue line reads “4.8” and is an index level well below where it was in the past:

Retail Sentiment

Two things to note here nonetheless.

1) While low, sentiment has improved substantially from the recent low already. Contrarians might see this as a sign to pull out.

2) Yet also, from a longer-term perspective, it’s clear that the retail investor actually become less and less bullish ahead of the 2008 crisis. So maybe retail investors aren’t always as dumb as some make them out to be.

(Via Citi Investment Research, Commodity Update, 29 October 2009)

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