The Spectrem Millionaire Investor Confidence Index (SMICI®) dropped 6 points in January to 10, a three-month low and the largest month-to-month drop since last October. The Spectrem Affluent Investor Confidence Index (SAICI®) lost four points to 7, the largest month-to-month drop since July 2014.
The indices measure the investment confidence and outlook of households with more than $500,000 of investable assets and more than $1 million of investable assets, respectively. The January SMICI is down 7 points from January 2014, while the SAICI is unchanged from the same period.
Millionaires are generally more confident and optimistic investors than their non-Millionaire counterparts. Throughout 2014, the SMICI posted increases in nine of 12 months, while the SAICI posted increases in seven months this year.
What drove the drop in investor confidence in January? Perhaps the primary factor is stock market volatility in the New Year. In the first two weeks of trading days in 2015, the Dow Jones industrial average fell or jumped by triple-digit amounts on eight occasions. Affluent investors indicate that stock market conditions is the most significant factor affecting their current investment plans
This caution is reflected in Spectrem’s monthly survey of how Affluent investors intend to invest in the coming month. While there was no change from December in the investors who said they would hold on the sidelines, there was a clear indication that they would back away from equities while investing more in Cash and Bond Mutual Funds. This more cautious investment mindset is also reflected in this month’s downturn in the Spectrem indices.
Also impacting the indices is the Spectrem Affluent Household Outlook, a measure of confidence in four financial factors that affect the daily lives of Affluent households. The overall Affluent and Millionaire Outlooks were basically unchanged from December, but a more positive mindset about the economy in was offset by a decline in confidence in household income.
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