Few Bears in Market, But No Need to Worry

By Jason Goepfert Oct 28, 2010 10:20 am

Historically, a multi-year low in the percentage of bears hasn't been a good predictor of future market weakness.

The latest survey from the American Association of Individual Investors was released today and shows a continued drop in the percentage of moms-and-pops that think the market will drop over the next six months.

The current percentage of bears is the lowest since early 2007.



Even a closet contrarian would be worried when they have such little company. But historically, a multi-year low in the percentage of bears hasn't been a good predictor of future market weakness.

The table below shows every instance since the AAII survey began in 1987 when the bears dropped to a new three-year low. Future market performance wasn't anything to be particularly worried about most of the time (small sample size, but still...).