Slowly and cautiously, millionaire investors' confidence in the markets rose in August. Should this influence how you invest?
For only the second time this year, millionaire investors became bullish, based on the bearishness-bullishness index compiled by Spectrem Group, a consulting and research firm specializing in the wealth management and retirement markets.
The index hit a value of 12. "Mildly bullish" territory starts at a value of 11. Values of 31 and above are outright "bullish."
The last time the millionaire's confidence index got into bullish territory was April, when it hit a value of 11.
The index for affluent investors rose to a value of 7, which is neutral territory. Affluent investors' confidence has not been in bullish territory since July 2015.
alled Spectrem's Investor Confidence Index, the millionaire benchmark gauges the investment confidence and outlook of households with more than $1 million of investable assets.
The affluent investors' index measures the confidence of investors with more than $500,000 in investable assets. It includes millionaires.
The indexes explore investors' attitudes regarding economic outlook, hypothetical investment preferences and actual investment intentions for the coming month. They are based on monthly interviews.
"We find that millionaires are typically a step ahead of where the general affluent investors are in terms of confidence," said Tom Wynn, Spectrem's director of affluent research. "Conversely, if something can make investors bearish, millionaires typically recognize it before general, affluent investors do."
Millionaires react sooner because their resources make them better informed. "Or at least they consider themselves more knowledgeable," Wynn said. "They are more likely to use a financial advisor."
Along with overall confidence for both categories of investors, the percentage of affluent investors who planned to move off the sidelines and into the markets jumped in August.
The portion of affluent investors intending to invest in bonds, for example, more than doubled by rising 127% in August.
The second-biggest increase was in the percentage of affluent investors who planned to invest in bond mutual funds. Their ranks rose nearly 41%.
Thirty-eight percent more affluent investors said they would invest in stock mutual funds. Individual stocks were the fourth biggest draw, with an additional 22% of affluent investors saying that's where they would put their money to work.
The portion of millionaires who wanted to come off the sidelines also rose. For example, 79% more said they want to invest in bond mutual funds, which was the biggest increase for them.
Individual bonds were next, with 71% of millionaires saying they would put money to work in fixed income.
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