The stock market cannot rise forever, can it?
That’s perhaps the thinking of affluent investors who indicated intentions to back off of investing in the near future, according to Spectrem’s Investor Confidence Indices for July 2019.
Despite record highs for the three major stock market reporting indices, there was a drop in investing interest in key components which make up the Spectrem indices. The only product to see an increase among all investors in July was in cash.
Both Millionaires and non-Millionaires reported a decreased interest in stock and stock mutual fund investing in July, one month after sizable increases were reported in those categories. Cash investing, meanwhile, rose by almost 10 percentage points among Millionaires, to 31.3 percent, the highest percentage of Millionaires investing in cash since August of 2012.
Here is a comparison of investors based on specific segmentation:
Millionaires vs. Non-Millionaires
Interest in stock and stock mutual fund investing fell among both Millionaires and non-Millionaires in July, and the largest drop was in stock investing by Millionaires, from 37.8 percent to 31.2 percent. Bond mutual fund investing among Millionaires was nearly cut in half, from 19.7 percent to 10.9 percent. Among Millionaires, those not investing, meaning the investors who will not add to any asset allocations in the coming month, rose to 34.4 percent, a three-month high.
Non-Millionaires expressed an increased interest in cash investing, from 16.3 percent to 19.7 percent, and, notably, decreased the percentage of those investors not investing in the coming month, from 48.8 percent to 47.5 percent. Real estate investing among non-Millionaires rose to a four-month high at 5.7 percent.
Men vs. Women
Female investors did not match the mindset of male investors in July. Where male investors backed away from stock and stock mutual fund investing, females increased their interest in stock investing slightly. The drop in stock investing among men fell dramatically, from 37.9 percent to 27.0 percent, the lowest percentage among male investors in 2019.
Bond mutual fund investing fell among both men and women in July, and the interest among women fell off the table, down to 4.1 percent from 12.4 percent in June.
However, while males not investing in July fell from 34.5 percent to 33.6 percent, it increased among females to 52 percent from 49.5 percent. That marks only the second month in 2019 when more than half of female investors said they would not be adding to their allocations in the coming month.
Republican vs. Democrat
Republican investors proved to be the ones backing off in July. They dropped interest in stock investing by half from June, going from 37.10 percent to 19.80 percent. They reported decreased interest in all other products in the survey with the exception of cash, which doubled from 13.40 to 28.40 in July. Republicans reported zero interest in investing in individual bonds in July, down from 6.19 percent in June and 17.65 percent in May.
Democrats, meanwhile, showed a slight increase in stock and individual bond investing, while dropping their interest in stock mutual funds from 33.33 percent to 27.06 percent.
Both Republicans and Democrats had an increase in investors not investing in July, and the increase was more than 6 percent among Democrats.
Working vs. Retired
With a report that the Federal Reserve was considering an interest rate cut in late July, retired investors may have decided to increase their investments to take advantage of the higher rates as long as they last. Retired investors increased their interest in stock mutual funds, individual bonds and cash investing, and for the second consecutive month they dropped the percentage of those not investing, down to 50 percent.
Working investors followed the line of investors overall, dropping their intentions to invest in all products other than real estate and cash. Stock mutual fund investing among working investors fell from 38.8 percent to 32.4 percent. Those not investing increased to 32.4 percent among working investors, the second consecutive month of more investors backing off.
©2019 Spectrem Group
Keywords: investors, stock market, advisors, Spectrem, investing, stocks, mutual funds, bonds,