Spectrem Millionaire Investor Confidence Index (SMICI®) = 3
June 2019-July 2109 - Down 10
July 2018-July 2019 - Down 5
Spectrem Affluent Investor Confidence Index (SAICI®) = -1
June 2019-July 2019 – Down 7
July 2018-July 2019 – Down 4
· Despite historic highs in the three major stock market indices (Dow Jones, S&P 500, NASDAQ), and the strong hint that the Federal Reserve would drop the benchmark interest rate in early August, the Spectrem Investor Confidence Indices both recorded remarkable drops in July. The SMICI, which rose 7 points in June, fell by 10 points in July to settle at 3.
· The SAICI had a similar drop in confidence, from 6 to -1, undoing the 7-point gain from July. The SAICI has been in negative territory five times in the last nine months.
· Stock investing among all investors fell dramatically, and among Millionaires it fell to 31.2 percent, the lowest level in that category since January, when investors were still reacting to December’s severe stock market drop. Among non-Millionaires, stock investing dropped again below 20 percent to 19.7 percent.
· The Spectrem Household Outlook among all investors fell minimally, from 25.2 to 24.7. It actually rose among non-Millionaires, from 19.72 to 23.98, reaching a level not seen since September 2018. But among Millionaires, the Outlook fell by more than five points, from 30.51 to 25.39, removing all the gains from the last two months.
The August Spectrem Investor Confidence Index survey was conducted from July 15 to July 22. After reaching 27,000 for the first time on July 11, the Dow Jones remained above 27,000 throughout the period of the survey, and topped out at 27,359 at the close of business on July 15. The NASDAQ and S&P 500 enjoyed similar results.
However, both the Spectrem Millionaire Investor Confidence Index and the Spectrem Affluent Investor Confidence Index dropped radically in July, by 10 points among Millionaires and by 7 points among all investors. There have been recent similar decreases in Millionaire confidence; from August to September of last year, the SMICI fell by 13 points, from the post-recession high of 20 down to 7.
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.
Despite the steep climb of the stock indices, investors in July reported a loss of confidence that the market reflects the state of the economy, and many believe that a market correction is on the horizon, in a “what goes up, must come down’’ scenario.
All of the factors that have driven the markets through 2019 still exist; there is no final trade agreement with China, the United Kingdom is in complete flux with the selection of a new Prime Minister, Brexit is still being debated, and the United States is no closer to peace with either North Korea or Iran.
Increasing asset allocations when the stock market is at a historic high is a questionable strategy. At the same time, some stock market observers predict the Dow Jones will reach 30,000 by the end of the year, and such speculation could prompt some investors to want to continue to ride the wave.
An examination of the specific investing products for investors showed a decrease in interest in all categories other than cash, where investing interest went from 19.20 percent to 25.60 percent. Stock investing intentions fell from 31.20 percent to 25.60 percent, and fell more than 6 percentage points among Millionaires, from 37.8 percent to 31.2 percent.
Spectrem’s Household Outlook, a measure of the long-term optimism among investors in four financial factors which impact a household’s daily life, dropped slightly among all investors, from 25.20 to 24.70. The Outlook actually rose among non-Millionaires, but that increase was matched by a decrease among Millionaires, who dropped their Outlook by more than five points. Among the four components which make up the Outlook numbers, all changes were slight, with an increase in the Outlook for Household Income and a small decrease in Outlook for the other three components.
©2019 Spectrem Group
Keywords: overview, confidence, investors, advisors, Spectrem, stock market, mutual funds, bonds