Investor sentiment (AKA animal spirits) has roared back after new stock market highs that followed the pullback of December and January. One measure of investor sentiment is the AAII Sentiment Survey. Since 1987, the American Association of Individual Investors (AAII) survey has asked individual investors their thoughts on where the stock market is heading in the next six months. Respondents are classified as either bullish, bearish, or neutral.
Starting in early December 2024, bullish sentiment fell six weeks in a row as the S&P 500 dropped about five percent. The decline resulted in a mere quarter of respondents reporting as bullish for the week ending January 15, 2025, the lowest level since November 2, 2023

Then, in just one week, the number of bulls nearly doubled from about 25 percent to 43 percent for the week ending with January 22, and the number remains high. That upsurge was the biggest same-month jump since November 23 and only the second bounce of such significance in the last 15 years. Bullish sentiment is now above its historical average and nearly back to the levels it was at mid-December 2024, before it started its six-week decline.
Sentiment typically becomes bearish when the stock market goes down because individual investors are more sensitive to prices than fundamentals. But it was unusual to see them become bearish so quickly when the stock market pullback was only about five percent. It looked like a signal that the downside momentum would build, but it turned out to be noise, not a signal. Sometimes that happens. Fortunately, I held equity positions in portfolios and even got some cash to work. The S&P 500 rallied nearly five percent in just a couple weeks to a new high, dragging bearish investors into the bullish zone again.
Should you buy stocks at an all-time high, or should you only buy the dips?
The capitulation of sentiment combined with new animal spirits sets up investors to more confidently buy any dips, as it feels more likely that a five percent pullback will bounce off bearish levels rather than develop into a crash. Not that you must wait for dips to buy stocks. Waiting for a market dip often leads to missed opportunities.
Conventional wisdom often warns investors against putting money to work when the stock market is at all-time highs because of the fear of an imminent downturn. I disagree with that investment philosophy. History tells a far more encouraging story.
Investors who commit their cash at market peaks have often reaped long-term rewards, outperforming those who wait for a pullback that may never come. Even if an investor were to put money into the market exclusively at historical peaks, their returns over time would still be substantial. For example, between 1928 and 2022, the S&P 500 was at or near an all-time high nearly 30 percent of the time. Those who invested at these peaks and held their positions for the long term benefited from the market’s upward trajectory, fueled by economic growth, corporate innovation, and compounding returns. The U.S. stock market has spent more time climbing than falling, and periods of decline are often short lived compared to the bull runs that follow. That said, many investors would still benefit from becoming more conservative prior to more significant drawdowns, especially those associated with an economic recession.
The Stargate Project
Even though the S&P 500 hit a new high, nothing much changed fundamentally, at least not relative to a global GDP of approximately $100 trillion. However, some bullish news from the White House boosted animal spirits for investors in the Utilities and Artificial Intelligence industries.
President Trump held a press conference and enthusiastically discussed the ambitious Stargate Project, an initiative involving a $500 billion investment in artificial intelligence infrastructure in the United States. The Stargate project aims to create more than 100,000 jobs, construct colossal data centers, and enhance healthcare through AI applications.
Leading technology CEOs, including Larry Ellison of Oracle, Masayoshi Son of SoftBank, and Sam Altman of OpenAI’s ChatGPT, joined the president. They collectively expressed their commitment to launching this monumental AI endeavor. Microsoft, Nvidia, and Arm Holdings are also involved.
Trump hinted that he would use “emergency declarations” to accelerate the development of the data centers, as “we have to get this stuff built,” and plans to “make it possible to get that production done very easily.” The president emphasized the importance of keeping technological advancements within the U.S. to maintain a competitive edge against rivals.
This is good news for the AI industry as well as the utility sector, which will provide the energy to support the initiative. The president’s plan to expedite energy production highlights energy’s critical role in supporting technological infrastructure. Ensuring a reliable energy supply is essential for successfully implementing the Stargate Project.
Elon Musk, Serial CEO (Tesla, SpaceX, Boring Company, X, xAI, Neuralink) and head of the White House’s Department of Government Efficiency (DOGE), threw shade on the announcement, alleging, “They don’t actually have the money,” referring to the $500 billion investment. That comment triggered a war on the X platform (formerly Twitter), which was practically its own reality TV show. More importantly, nobody has to show up with $500 billion on day one to get the Stargate Project off the ground. One of my favorite podcasts, BG2, broke it down in detail.
BG2 pod hosts Bill Gurley and Brad Gerstner were collectively responsible for investing in startup companies such as Zillow, Uber, GrubHub, Open Table, Priceline, Google, and EPIC games. From around minute nine to minute 19 of the podcast, they detailed how $500 billion of investment can be raised and distributed.
Musk’s post on X seemed more of a swipe to his business enemy, Sam Altman (another reality TV show), than a demonstration of how funding major projects is actually done. Stargate will begin with an initial investment of $100 billion, with more to come over the next four years. The point is that this deal may still happen despite the gossipy headlines and its high level of ambition.
Demand for physical infrastructure, such as data centers, computer chips, and electricity to support AI computing is expected to grow as technology develops. America’s most prominent technology companies were already expected to invest close to if not more than $100 billion in 2025. Over the next four years, this additional investment could lead to a surge in innovation and economic growth, fostering a new industry centered around advanced technology. I was interested in investing in the Artificial Intelligence and Utilities sectors and am now more interested in both. I made some new investments.
I made a straight-up sector play for more conservative portfolios with the well-known and widely held Utilities Select Sector ETF (symbol: XLU).
For more growth-oriented portfolios, I increased AI exposure. I took a more diversified approach to sector exposure, using two ETFs. One AI ETF is the Invesco AI and Next Gen Software ETF (symbol: IGPT). IGPT tracks the biggest names in the space, like Alphabet, Nvidia, and Meta. The other AI ETF is the ROBO Global AI ETF (symbol: THNQ). THNQ invests in smaller companies that develop the technology and infrastructure enabling AI, such as computing, data, and cloud services, as well as companies that apply AI in various verticals, from business processes to e-commerce to healthcare.
Allen Harris is an owner of Berkshire Money Management in Great Barrington and Dalton, managing more than $700 million of investments. Unless specifically identified as original research or data gathering, some or all of the data cited is attributable to third-party sources. Unless stated otherwise, any mention of specific securities or investments is for illustrative purposes only. Advisor’s clients may or may not hold the securities discussed in their portfolios. Advisor makes no representations that any of the securities discussed have been or will be profitable. Full disclosures here. Direct inquiries to Allen at AHarris@BerkshireMM.com.