Why So Bearish?

“Be fearful when others are greedy and greedy when others are fearful” is one of my favorite quotes by Warren Buffett.

His words of wisdom encourage investors to be contrarian. He challenges investors to “go against the grain” when evaluating opportunities.

Here’s how his insights might be playing out these days. While stock prices were hitting all-time highs in early February, individual investors had become increasingly bearish. The AAII Sentiment Survey hit 28.4 on February 12–the lowest reading since November 2023.

The AAII reports suggest individuals are fearful. And who can blame them? There’s a whole bunch of reasons to be sour about the next 12 months. Tariffs, inflation, interest rates, and geopolitical worries are all reasons to be concerned. Taken together, it’s easy to see how individuals can feel overwhelmed. But does that mean it’s time to be greedy?

Remember one thing–individual investors are not Wall Street professionals. Individuals historically tend to get pushed around by overconfidence, regret, and trend-chasing. These factors can lead to emotion-driven decisions.

So, how will stocks perform during the next 12 months?

Ask me again in February 2026, and I’ll tell you how it turned out.

In the meantime, let’s stay focused on your goals!

^{AAII.com, February 20, 2025}