Investors’ confidence in the stock market is growing as the S&P 500 and the Nasdaq reach record highs, with individual investors as optimistic about the stock market as they’ve been in the past 12 months.
Nearly two-thirds of respondents describe their sentiment as “cautiously optimistic,” or “optimistic,” the highest levels of bullishness registered in the past year.
Close to 20% say they are putting more money to work in the stock market, and more than one-third expect returns of 5% or more over the next six months. About half of respondents say their portfolios are leaning “somewhat” to “very” risky, while 15% say they are making riskier investments in light of recent market events. Both of those categories increased slightly from early May.
Meanwhile, only 18% of respondents say they worry the market will fall 10% or more in the next three months, which is 7 percentage points lower than the last time we asked in April.
1 in 3 invested readers now expect S&P 500 returns of 5% or more over the next 6 months.
Changes in investments in response to recent market events.
N=750 invested readers per date. Dates reflect end of fielding period.
While the S&P 500 has made over 30 new record highs so far this year, individual investors have been somewhat reticent to put new money to work in the markets, with net purchases of stocks and exchange-traded funds (ETFs) still relatively weak for this time of the year amid a slump in retail activity, according to Vanda Research. However, there are signs that individual investors are starting to get more involved, given recent fund flows into tech stocks and ETFs, according to Bank of America Research. Our respondents echoed that sentiment, as over one in four readers say they are actively investing more in ETFs and stocks.
Are you choosing more or less of the following investments because of recent market events?
Multi-select. N=819 invested readers.
One of the truest measures of investor confidence in our bi-monthly survey is what respondents say they would do if they had an extra $10,000 to invest. Throughout the bear market of 2022, and the bull market recovery of 2023, investors preferred the safety of certificates of deposit (CDs) versus the perceived riskiness of stocks and ETFs. But, as of the first few months of 2024, respondents favored individual stocks over CDs, with ETFs as their second choice.
With the incredible rise of stocks like Nvidia (NVDA), which have helped propel the broader market higher, investors’ preference for individual equities for their hypothetical extra cash is little surprise.
If you had an extra $10,000 right now, where would you be most likely to put it?
The upcoming presidential election has remained one of our readers’ top concerns for several months running, with over half saying they are worried about the upcoming presidential election’s impact on their portfolios.
Inflation is their second-highest concern, followed by persistently higher interest rates and U.S. relations with China. Climate disasters, while low on their list of worries, has been growing as a concern given recent floods and record heat waves. While investors’ list of worries is long, their enthusiasm for stocks continues to grow.
Are you concerned about any of the following impacting the performance of your investments over the next 12 months?
While history teaches us that whether a U.S. president is Republican and Democrat has little impact on stock market returns, 37% of respondents believe that Donald Trump, if elected again, will deliver better returns than President Biden, if reelected. Meanwhile, 27% of respondents believe a Biden second term would deliver better returns.
Under Trump’s term in office, from January 20, 2017 to January 18, 2021, the S&P 500 delivered a return of 69.6%, which included a 34% drawdown at the onset of the pandemic in the spring of 2020. Since President Biden took office in January of 2021, the S&P 500 has returned about 44%, including the bear market of 2022.
While presidents can impact shareholder returns with tax policies and their handling of the economy, their impact on the stock market can be affected by external factors in the global economy, and whether or not their political party controls both houses of Congress. What may be more relevant for investors is the fact that election years typically deliver better returns than non-election years.
Over 1 in 4 believe the election outcome wouldn’t make a difference
Not only do our readers cherish these mega-cap tech stocks today, they would choose the same top three stocks, NVDA, MSFT, and AAPL, to hold for the next decade. Tesla (TSLA), which is notoriously volatile and down 27% so far this year, remains in the top 10 on both lists. Berkshire Hathaway (BRK.A) and Costco (COST) also made the top 10 list for stocks to buy and hold for the next 10 years.
If you had to buy one stock today and hold it for the next 10 years, which would you choose?
Tags :
Investors, Markets Hitting Record Highs, Personal Finance
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