Weekly Notes from Tim
By Tim Holland, CFA, Chief Investment Officer
- Is – for most investors – easier said than done, considering we are social creatures that have a difficult time separating ourselves from the crowd…so, when it comes to the market when other investors are fearful, we tend to be fearful and when other investors are greedy, we tend to be greedy (the full bit of wisdom is from Warren Buffett who said it is wise for investors to “Be fearful when others are greedy and to be greedy when others are fearful,” which makes sense from a contrarian perspective…if everyone on Wall Street is bullish, stocks likely are overpriced and if everyone on Wall Street is bearish, stocks likely are underpriced). Which brings us to this week’s note, and a topic we have touched on more than once this very volatile year, and that is sentiment.
- The American Association of Individual Investors Sentiment Survey, produced by the AAII weekly since 1987, asks individual investors if they are bullish, bearish or neutral on US stocks over the coming six months. Now, typically, bulls outnumber bears, which makes sense considering that markets go up more than they go down, and if one is investing in or following the market, one is likely rooting for a rise in prices. However, every once is a while, the AAII Sentiment Survey registers an extreme bearish reading (60%+); not surprisingly, those readings have come during very difficult periods for the market. But, more important than the extreme bearish reading itself, is that 12 months on from six of those eight readings US stocks were meaningfully higher (see chart, below).
- The jury is still out on two of those 60%+ bearish readings as they were recorded only this year, on February 27th (60.62%) and April 3rd (61.92%), the day after President Trump’s “Liberation Day” tariff announcement. While we are less than four months and three months on from those readings, we think it is worth pointing out that the S&P 500 is up approximately 3% and 12% from those survey dates (as of 6/12/2025). Be greedy when others are fearful.
Source: American Association of Individual Investors, April 2025
Looking Back, Looking Ahead
By Ben Vaske, BFA, Senior Investment Strategist
Last Week
Markets were on a calm uptrend last week until Friday, when geopolitical tensions rose with attacks between Isreal and Iran. Global equity markets gapped down, and oil prices rallied nearly 8% on Friday, US equities ended the week with just slight losses but remain positive YTD. Oil and gold prices pushed the broad commodity index up over 2% on the week, providing a ballast to equity declines for broadly diversified portfolios. Markets responded favorably earlier in the week to a light Consumer Price Index (CPI) report, which gained just 0.1% in May. With tariffs and other inflationary pressures in place, inflation reports have yet to show any meaningful increases (for a deeper dive on recent inflation trends, check out this new article from Orion research analyst Nolan Mauk: Benign Inflation Amid Tariffs: What to Watch Going Forward).
This Week
As for this week, all eyes will be on the Fed as their June interest rate meeting is scheduled for Wednesday afternoon. Jay Powell and the Fed have remained in a “wait and see” mode as it pertains to inflation and labor data, pointing a lot of attention to US policy and tariffs, before making any decisions on changing the policy rate. Thus far, unemployment and inflation have seen no meaningful increases, but our expectation is that the effects of US tariffs will likely have a lagged effect, resulting in probabilities of a cut this meet remaining very low. Also on the economic calendar this week is US Retail Sales, which will give us another glimpse of the US Consumer and any potential effects of price increases. Continued strength in retail sales along with low inflation and employment will likely push the Fed’s hand on interest rate policy within the next few meetings, if these trends remain. Also important to watch this week will be any developments geopolitically, as increased uncertainty along with higher commodity and oil prices could put pressure on business inputs.
We hope you have a great week. If there’s anything we can do to help you, please feel free to reach out to ben.vaske@orion.com or opsresearch@orion.com.