Retail Investor Sentiment Dashboard

1. What is the Retail Investor Sentiment Index?

The Retail Investor Sentiment Index acts like a thermometer for the market. It analyzes four key dimensions of data to indicate whether retail investors are feeling overheated or overly cautious.

Think of it as an "emotion radar" for investors — it helps you stay alert during market euphoria and spot opportunities during panic. Remember: in investing, when everyone is running in the same direction, sometimes going the opposite way is the smarter choice.

The key is to learn how to read this "thermometer" without letting it dictate your decisions. Good investing requires rational analysis, patience, and strict discipline — the sentiment index is just one tool to help you better understand the market environment.

How the "thermometer" works:

• First, we standardize different types of data into comparable values, like converting Fahrenheit to Celsius. Survey data, discussion activity, fund flows, and search trends are all converted into a 0–100 score.
• Then, each data source is weighted based on its importance:
  • AAII Investor Survey: 40% (direct measure of investor sentiment)
  • Reddit discussion activity: 30% (real-time sentiment of younger investors)
  • Retail fund flow proportion: 20% (reflects actual money being invested)
  • Google search trends: 10% (shows what investors are focused on)
• Finally, the weighted scores are combined into a 0–100 index. Higher scores indicate market euphoria, lower scores indicate pessimism.

2. Why these data matter

• AAII Survey: Acts like a regular "poll" of retail investors, asking whether they are bullish, bearish, or neutral.
• Reddit activity: Measures discussion intensity on investment forums. When forums get unusually active, market sentiment is often heating up.
• Fund flows: Actions speak louder than words. Even if investors say they are optimistic, if they don’t put real money into the market, sentiment is discounted.
• Search trends: A surge in searches like "how to bottom fish" or "stock market crash" often reflects fear or greed in the market.

By combining these sources, we capture both what retail investors say and what they do, making the index more accurate and reliable.

3. How to use this "contrarian indicator"

The greatest value of the Retail Investor Sentiment Index is that it often serves as a contrarian indicator — when optimism is extreme, risk is often highest; when pessimism is extreme, opportunities are often best.

Practical guidance:

• Index above 75 (Overheated zone):
  • Like a thermometer showing a "high fever," the market may be overheated.
  • Stay calm and consider reducing exposure.
  • Avoid chasing rallies; don’t get swept up in market frenzy.
• Index below 25 (Fear zone):
  • Like a thermometer showing "too cold," the market may be oversold.
  • Look for quality assets that have been unfairly sold off.
  • Build positions gradually, like shopping during a sale.
• Index between 25–75 (Normal zone):
  • Market sentiment is relatively stable.
  • Follow your usual investment plan.
  • Use the index as a reference, not as a direct signal.

4. Usage notes

• Update frequency: The index is updated daily to reflect the latest changes in market sentiment.
• Combine with other indicators: Just like a doctor wouldn’t diagnose a patient by temperature alone, investors should not rely solely on sentiment. It’s best used alongside fundamental and technical analysis.
• Practical tips:
  • Don’t blindly follow the crowd.
  • Stay rational during extreme emotions.
  • Use the sentiment index as an auxiliary tool, not the sole basis for decisions.
  • Establish and stick to your own investment discipline.