AAII: Retail Investors Slowly Climbing Back into Stocks

The latest AAII asset allocation survey showed that individual investors increased their equity holdings by 2.2%, increased fixed income exposure by 2% and reduced cash by 4.3%. ┬áThat’s a meaningful swing in cash levels and shows how desperate small investors are to put some money to work. ┬áThe current equity levels show that individual investors are still not completely sold on the rally as the historical average equity allocation is 60% while the latest reading brings us up to 61.7%.

Here’s more via AAII:

This month’s special question asked AAII members what would prompt them to increase their allocations to stocks. Approximately 27% said they were looking for a drop in stock prices, with many saying they were looking for a drop of greater than 10%. Another 25% said there was no catalyst that would cause them to increase their equity allocation. A sizeable portion of respondents in this group listed their satisfaction with their current portfolio allocation as the reason why. The next largest group, representing 7.5% of respondents, said better economic growth would cause them to buy more stocks. A small number listed their age as the reason why they are allocating more to equities, but indicated they would buy more stocks if they were younger.

Here is a sampling of the responses:

  • “I am waiting for a correction. Most quality stocks look overvalued to me.”
  • “After a large correction of 10% or more, I would allocate a large percentage of my cash to stocks and stock ETFs.”
  • “Nothing. I have an asset allocation plan and I am not deviating from it.”
  • “Nothing. I believe my current allocation is the maximum appropriate allocation for my and my wife’s age.”
  • “For me to be 10 years younger and further from retirement, which is not likely to happen.”
  • “Convincing my wife that we should change our allocation to reduce the bond component. I have been unsuccessful so far.”

Chart via Orcam Financial Group:




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Cullen Roche

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services. He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance and Understanding the Modern Monetary System.

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  1. What is the sample size for the survey? Typically the sample size is so low as to be meaningless.

  2. I may be misreading this but if current % equities is higher than 60% average, then they must be sold on equity??

  3. Aside from what looks to be a gradual re-entry of investors into stocks, what would you recommend with regards to equity markets (index investing):
    1. Sit on uninvested cash and wait for a dip
    2. Dollar cost average uninvested cash
    3. Lump-sum into current market conditions
    4. Other