Yesterday, we highlighted a measure of money flow that suggested short-term bullish sentiment may be getting a tad bit extreme. Today, we look at another series currently indicating a potential elevated extreme in stock investment – only from a longer-term perspective.

Each month, the American Association of Individual Investors (AAII) surveys its member regarding their current level of stock, bond and cash allocation (this is separate from the weekly stock sentiment survey published by AAII which has become too volatile and erratic to be a consistently useful sentiment tool, in our view). The monthly allocation survey tends to move at a measured pace, dictated by the movement in asset prices. Thus, we have found it to be a fairly useful barometer of longer-term investor sentiment.

Investor stock allocation in the survey, which began just after the crash in 1987, has ranged from a low of 41% at the depth of the financial crisis in early 2009 to a high of 77%, hit at the peak of the dotcom bubble in early 2000. Interestingly, despite the post-2009 bull market's relentless ascent by stock prices – particularly in recent years – AAII stock allocation has remained relatively subdued. It's high during the past 9 years was "just" 69%, registered in late 2014 and early 2015 as well as a few times last year.