What does 'investor sentiment' refer to?

Investor sentiment refers to the overall attitude of investors toward a particular market or asset. It encompasses the feelings, biases, and emotions that investors experience when making decisions about investments. This sentiment can be influenced by various factors, such as economic data, news headlines, market trends, or individual experiences.

When sentiment is positive, it often leads to increased buying activity and can drive asset prices higher. Conversely, when sentiment is negative, it may lead to selling activity and can push prices lower. Understanding investor sentiment is crucial for traders and analysts because it helps in forecasting market movements and potential turning points.

The choices that involve financial standing, average income, or the number of investments do not directly capture the essence of sentiment. They relate more to the quantitative aspects of investors rather than the qualitative emotional or psychological state that sentiment embodies.