The stock market, which reeled in negativity just six months ago, has roared back and jumped to new heights, if the standard indices are any measure.
As the S&P 500, Dow Jones and NASDAQ record new highs during the summer months of 2019 it is difficult to remember that the Dow Jones lost 4,000 points in the month of December, and investor confidence was at a severe low, one of the lowest levels in the Donald Trump presidency.
Even as the markets regained most of the points lost in the late 2018 slide, investors remained cautious. Interest in individual stocks was low and placid, and investors who wanted to participate did so in safety products like the bond market and cash products.
That all changed as summer rolled around.
Spectrem’s Investor Confidence Indices for June showed a renewed vigor among investors, including those who are no longer in the workplace. Like those investors still working, retired investors decided it was time to return to the individual stock marketplace in June.
Retired investors are, almost by definition, less active investors. Their portfolios are relatively static, built to create income and security rather than for growth potential. However, in June, there was a 1.6 percent increase in investing interest in individual stocks, to 18.8 percent. There was also an increase in stock mutual fund investing to 20.8 percent.
Historically, more than 50 percent of retired investors state that they are not planning to add to their asset allocations in the coming month, but that percentage dropped in June from 57 percent to 54.2 percent. For comparison sake, there were two months earlier in 2019 when that percentage fell well below 50 percent.
The Spectrem Household Outlook, which describes the outlook of investors regarding four key components of their daily financial lives, dipped more than 8 points in June to 10.16, the lowest mark of the year. Creating that dip was the retired investors’ outlook toward the economy, which fell from a positive number, 10.75, into negative territory at -7.29, a decrease of almost 18 rating points. Retired investors regularly rate their outlook for the economy in the negative range, but in June that rating was the lowest of the year.
Every month, the Spectrem Investor Confidence Index includes one question asked every three months that relates to current events, and in June the question was “What is the most serious threat to achieving your household’s financial goals at this time?” In June, 31 percent of retired investors said the political climate was the most serious threat to their household finances, and that reaction among retired investors was not matched by working investors (19 percent), who were more likely to point to economy as the issue (16 percent to just 8 percent among retired investors).
Retired investors were also more likely than working investors to point to market conditions as a serious threat, with 22 percent of retired investors naming the market as a problem to just 15 percent of working investors. That makes sense, as working investors are more likely to appreciate the growth of the markets than retired investors and more likely to worry about economic indicators (interest rates, particularly) than retired investors.
©2019 Spectrem Group