Spectrem Millionaire Investor Confidence Index (SMICI®) = 1
November 2019-December 2019 - Down 7
December 2018-December 2019 - Even
Spectrem Affluent Investor Confidence Index (SAICI®) = -2
November 2019-December 2019 – Down 3
December 2018-December 2019 – Up 3
· Investors were surveyed during the week when impeachment proceedings against President Donald Trump reached their conclusion, and investors reacted negatively to the anticipated result. The lower index numbers came in despite the stock market continuing its steady climb to new heights, a tiny advance in the U.S.-China trade talks, and holiday sales reports coming in with positive numbers.
· The SMICI fell 7 points from November to December after coming in with a 6-point increase in November. With an index of 1, the SMICI is at its lowest point in fourth months and its second-lowest rating of the calendar year. The SAICI also fell by 3 points and moved back into negative territory, where it has been for seven of 12 months in 2019.
· Millionaires and non-Millionaires had completely different reactions to the news of the week, as Millionaires backed away hard from further investment in equities while non-Millionaires increased interest in individual stocks. Among Millionaires, individual stock investing fell from 34.4 percent to 26.5 percent, not only the lowest rate of increased investment for the year but the lowest since December of 2008, when the reality of the Great Recession hit hardest. Meanwhile, among non-Millionaires, individual stock investing actually rose 18.9 percent to 24.6 percent, and stock mutual fund investing rose from 23.8 to 27.1 percent.
· The category of those not investing, meaning the investors who are not going to make any additions to their investment allotment over the net month, actually dropped among both Millionaires and non-Millionaires, but investors seemed to place all of their new investing in cash, using that as a reserve position rather than an actual investment strategy. Among Millionaires, those not investing dropped from 34.4 percent to 25.0 percent, and among non-Millionaires it fell from 50.8 percent to 34.8 percent, the lowest level of non-involvement among non-Millionaires since April of 2018.
· The Spectrem Household Outlook among all investors fell for the first time in fourth months, from 22.30 to 16.50. The Outlook for the economy fell back into negative territory for the fourth time in the last five months, dropping from 1.00 to -8.80. The Outlook for all four components fell among all investors, although non-Millionaires increased their Outlook for household assets from 35.25 to 40.68.
The Spectrem Investor Confidence Indices survey was conducted from Dec. 12-18, 2019, when the details of the impeachment process came clear, and the vote in the House of Representatives eventually took place. The stock market did not care, as record closing highs were set in the three major indices were set frequently. But investors were paying attention, and their confidence in the markets going forward dipped significantly.
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 SMICI fell from 8 to 1 in December, moving from its third-highest mark of 2019 to its second lowest in one month’s time. The SMICI had a 10-point drop from June to July this summer when trade battles with China was in the headlines every day. The SAICI fell from 1 to -2, falling back into negative territory for the seventh month of the year, and for the fourth month out of the last five.
Millionaires appeared to react severely to the impeachment of a pro-business president, reducing their interest in individual stock investing and increasing their intention to invest in cash products by almost the same percentage. The continued bull market may also have made Millionaire investors wary as they consider whether the bull market can continue unabated.
Increased investing in individual stocks among Millionaires fell from 34.4 percent to 26.5 percent, while cash investing increased from 29.5 percent to 28.8 percent. At the same time, Millionaires not investing, meaning those investors who are staying on the sidelines for the coming month, dropped notably from 34.4 percent to 25.0 percent, the lowest level of non-participation among Millionaires since February of 2018. Since it appears most of that “investing” was in cash products, investors seem to be taking a reserve position rather than actively participating in the investment environment.
Non-millionaires actually increased their interest in individual stock investing, with an increase from 18.9 percent to 24.6 percent. There was also an increase in stock mutual fund and cash investing among non-Millionaires.
Spectrem’s Household Outlook, a measure of the long-term optimism among investors in four financial factors which impact a household’s daily life, fell for the first time in four months, from 22.30 to 16.50, but staying above the level of 8.00 reached in August, when the Outlook was at its lowest point 3 ½ years. After finally getting back to a positive number in November, the Outlook for the economy fell again into negative range at 8.80, and it has been in negative territory overall for four of the last five months.
©2019 Spectrem Group
Keywords: index, overview, investors, advisors, Spectrem, equities, confidence, outlook