Chart of the Day - Thursday, December 29th, 2022

20. Holding Out for a Hero:
Despite terrible investor sentiment, individual investors were slow to reduce holdings in equities. Allocations to equities are off of the highs (down from 70% to 62% ) but remain well above prior major bear market lows (45-50% in 2001 and 2009). pic.twitter.com/hemoKeB14e

— Cameron Dawson (@CameronDawson) December 29, 2022

Today’s Chart of the Day was shared by Cameron Dawson (@CameronDawson). The chart emphasizes the disparity between how investors feel, and how they're actually positioned. The blue line represents the bull-bear spread from the AAII Sentiment Survey. This was the most bearish year in the history of the AAII Sentiment Survey, with the bull-bear spread spending a record 39 consecutive weeks in negative territory. Extremely bearish sentiment should be bullish, however, AAII Sentiment failed to act as a contrarian indicator this year. While investors might say they're bearish, they hardly reduced their exposure to stocks this year. As Cameron points out, equity exposure fell from 70% to 62%, which is still elevated within its historical range and well above levels where previous bear markets have bottomed. Watch what they do, not what they say.