New Year optimism tempered with continuing concern about the economy drove an increase in the Spectrem Affluent Investor Confidence Index (SAICI®) in December. The SAICI gained five points to 11, a three-month high. The Spectrem Millionaire Investor Confidence Index (SMICI®) gained three points to 16, also the highest reading since last September.
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 December SAICI and SMICI are up 12 points each from the same period last year, an indication that Affluent households overall have a positive mindset about the present and future financial situation.
The economy is also considered by Affluent investors surveyed this month by Spectrem Group to be one of the most serious threats to achieving their current financial goals, along with the political climate (see page 3). Both have been key drivers in the Affluent investor mindset as measured by Spectrem Group since 1994.
Over the past decade, the Spectrem indices have served as a reflector of Affluent investment behavior as well as their economic concerns. The indices have yet to return to levels reached in the year’s leading up to the economic collapse. In December 2004, the SAICI was at 13, while the SMICI was at 20. By the end of 2007, the year the housing bubble burst, they were down to 0 and 8, respectively.
The SAICI and SMICI plummeted in 2008. By December of that year, they were at -31 and -23, respectively. They provided another snapshot of the Affluent investor mindset the next year, when the indices ended the year in negative territory (-15, -10), but were trending upward.
The indices each ended the year in negative territory through 2012. During this period, concerns over the economy were exacerbated by partisan divide and government gridlock. Last year, for example, the SAICI dipped from 1 in November to -1 in December, while the SMICI fell from 10 to 4. During this time, lawmakers were at loggerheads over sequestration and initially unable to reach an accord leading up to the deadline that would trigger mandatory spending cuts.
Not coincidentally, during this time, there was a jump in Millionaire and non-Millionaire investors who indicated that they would hold on the sidelines rather than invest, which is a drag on the indices.
With the Republicans taking control of the House and Senate in 2015 and debates over immigration and health care in the offing, it will be interesting to see how the Spectrem indices react in their second decade.
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