VTV - The 70% Stock Allocation By AAII Members Is A Problem

2024-06-11 11:15:08 ET

Summary

• AAII members currently have 70.4% allocated to the stock market, the highest percentage since 2021. Ratios over 70% have historically preceded difficult markets.
• The lowest stock allocations of 40% occurred at the bottom of bear markets, while the highest allocations occurred before major corrections or bear markets.
• Cash allocations also follow a similar pattern, with the highest allocations at bear market lows and the lowest allocations at market tops.
• The current AAII asset allocation numbers reinforce our belief the market will produce a zero return over the next nine months, and a negative return over the next eighteen.

Financial writers often present the weekly survey of bullish and bearish opinions of AAII members to gain insight into what the stock market will do. However, there's another AAII survey that is not as well known, which can be equally insightful. It's the percent AAII members have allocated to the stock market. This number is compiled monthly by AAII with historical data available for research by any member under the title "asset allocation survey."...

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