Investor Optimism Down From a Year Ago: Survey

But two-thirds of investors feel prepared to weather any storm
Financial stock board with city reflection

While there’s no crystal ball to predict how the stock market will fare in the coming months, a new survey suggests that investors are more wary in their near-term investment outlook than they were a year ago.

The survey, the most recent edition of the Wells Fargo/Gallup Investor and Retirement Optimism Index, which was conducted in early May, showed a definite decline in optimism. The survey’s headline index dropped to 85 points, a fall of 18 points from 103 a year ago, with investors less convinced that they would reach their 12-month and five-year investing goals than at the same point in 2018.

The index, which uses October 1996 as its baseline, was part of the study from major financial institution Wells Fargo and polling and analytics company Gallup. To get a snapshot of investors’ comfort level with market conditions, they surveyed a panel of 1,240 investors 18 and older who have at least $10,000 invested in stocks, bonds or mutual funds.

While more than half of the investors (61%) described the economy as either “booming” or “solid,” the same percentage admitted worrying that the market may be “peaking.” In addition, 11% said they believe a recession will begin later this year, and another 40% said predicted a recession will begin in 2020.

For the most part, however, the survey’s panel members weren’t running scared. In fact, two-thirds described themselves as being financially prepared if a recession were to occur. Yet some groups felt more prepared than others:

  • 77% of men said they felt prepared versus 55% of women
  • 72% of retirees said they felt prepared versus 64% of non-retirees
  • 74% of investors with more than $100,000 invested were prepared versus 57% of investors with less than $100,000 invested

The sense of preparation may have been helped by the survey panel’s relatively strong current incomes: 42% of the panel members earning less than $90,000 a year, with a majority (58%) earning $90,000 or more.

But another reason so many investors may feel prepared to weather a recession is because 75% of those surveyed said they had put either “a lot” or “a fair amount” of thought into achieving their retirement goals. Also, many of the panel’s non-retirees said they were taking action to be in a better position if a recession were to occur in the near future:

  • 59% said they were saving more
  • 52% said they were spending less
  • 22% said they were reducing their stock holdings
  • 15% said they were increasing their investment in bonds

Meanwhile, a small percentage of non-retirees were taking “major” precautions in anticipation of a future recession. Of those surveyed, 18% said they planned to delay a home purchase, and 23% said they intended to delay retirement.

No matter how well the economy is doing, investing always comes with a level of risk, which is why it’s important to have a solid foundation of knowledge about it. You should also take a long-term view of investing with the understanding that the market will have ups and downs.

The more thought you put into your investment strategy and your finances in general, the more prepared you are likely to feel whenever the next recession ultimately rolls around.

Tamara E. Holmes

Tamara E. Holmes is a Washington, DC-based writer who covers personal finance, entrepreneurship and careers.

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