Spectrem Millionaire Investor Confidence Index (SMICI®) = 2
- December 2018-January 2019 - UP 1
- January 2018-January 2019 - Down 13
Spectrem Affluent Investor Confidence Index (SAICI®) = -3
- December 2018-January 2019 – UP 2
- January 2018-January 2019 - Down 12
- After hitting a three-year low in December, The SMICI began its climb by moving up one point in January of 2019. It has now been five months since the SMICI has been in double digits.
- The SAICI recorded a five-year low in December, but moved up 2 points in January 2019 but remains in negative territory for the third consecutive month.
- In year-over-year comparisons, both indices have dropped double digits, and from January to January the SMICI is down 13 points.
- Most indicators did increase slightly from December to January, and more investors returned to active participation in the market in January.
Every climb begins with a single step, and that’s what investors did in January – they took a single step out of the canyon of pessimism they were in last month.
With the federal government shut down for almost the entire month of January, investors did not know what to expect from the stock market. Continued up-and-down negotiations with China, concern over nuclear issues related to North Korea, and the economic fretting over the state of Brexit created an atmosphere of complete uncertainty for American investors.
Yet investors persisted in participating in January. The Dow Jones Industrial Average actually had three consecutive weeks of gains in the month, climbing from just over 23,000 on Jan. 2 to over 24,700 by Jan. 25. The Spectrem Confidence Index survey was conducted between Jan. 18-24, 2019, while the market was steady despite the shutdown of the federal government.
Both the SMICI and the SAICI made slight improvements over the very low levels they reached in December. The SMICI pulled itself away from negative territory by one point to 2, and the SAICI moved up two points to -3, but remained in negative territory for the third consecutive month. The last time the SAICI was in negative range for three consecutive months was December 2012-February 2013.
There were several indicators to explain how the indices both moved up slightly in January.
Stock Mutual Fund investing rose 4 percent to 34 percent, and those investors Not Investing, meaning those who do not intend to put more funds into investment products in the coming month, dropped from 45.2 percent to 39.2 percent among all investors.
Stock investing among Millionaires rose slightly, to 29.5 percent. But among both Millionaires and non-Millionaires, Cash investing increased as investors buffer their slightly improved optimism with the safe decision to invest in cash products.
The monthly SAICI tracks changes in investment sentiment among the 17 million households in America with more than $500,000 of investable assets. The SMICI reflects the investment sentiment of households with more than $1 million in investable assets.
The effect of the government shutdown on the markets is unclear, since the market actually rose during that time. It was more likely that individual news stories, some involving corporate earnings reports and others related to global conflicts and negotiations, helped the market perform in a steady fashion in January after such a tumultuous December.
Despite the tiniest improvement in the confidence indices, Spectrem’s other investor attitude measurement fell. The Spectrem Household Outlook, a measure of the long-term confidence among investors in four financial factors which impact a household’s daily life, dropped to 10.90, the fourth month under 20 and the lowest mark since October of 2016. For a reference, the Spectrem Household Outlook was as high as 30.20 just four months ago.
The lower Outlook was driven by a deep dip among Millionaires, who dropped their Outlook from 17.66 to 10.47. This is the fourth month in a row the Millionaire Outlook has been below 20, and again for comparison, the Millionaire Outlook in September was 33.02. The last time the Millionaire Outlook was as low as 10.47 was again in October of 2016, just before the election of Donald Trump.
Among Millionaires, there was a sizable drop in Outlook for Household Income, Household Assets and Company Health. The Outlook for the Economy, which has been at its lowest level in years over the past four months, remained steady. Which is to say, still very low.
©2019 Spectrem Group