Recession concerns are not a new phenomenon for most American investors. Many of them lived through 2008, and all of them have heard the cry of the pessimists throughout the decade-long market growth since that time.
But the inverted Treasury note yield reported in mid-August, coming so quickly after a similar report in June, caused investors to rethink their allocations, pushing them toward cash and bond products and away from the stock market.
The Spectrem Investor Confidence Indices for August showed a slight decrease in interest in stock investing and a notable increase in cash and bond investing among all investors. There was even an increase among all investors in those adding to their allocations, although most of the additions were in the safety products previously mentioned.
Here is a comparison of investors based on specific segmentation:
Millionaires vs. Non-Millionaires
The decrease in individual stock investing among all investors was not large in August, but the increase in bond and cash investing was. Bond mutual fund investing among Millionaires rose from 10.9 percent to 16.8 percent after a large drop in that category in July. Non-Millionaires increased their interest in cash investing form 19.7 percent to 23.0 percent, the highest level since February.
Among both Millionaires and non-Millionaires, the percentage of those not investing, meaning those not increasing their allocations in any category, dropped in August, meaning that they still want to invest, but are avoiding the more speculative options. Only 46.9 percent of Non-Millionaires said they would not increase allocations in the coming month, the lowest percentage in five months.
Men vs. Women
With all of the pessimism surrounding the economy in August, female investors apparently saw something else. Unlike their male counterparts, female investors increased their interest in all components of the Spectrem Confidence indices, most notably with a 11.5 percent increase in the interest in stock mutual funds, to 28.9 percent, nearly matching the 29.3 percent of male investors increasing their stock mutual fund investing. Female investors also doubled their interest in individual bond investing and nearly doubled their cash product interest, topping male investors in that category. Only 41 percent of female investors expressed plans to maintain their current allocation level, the lowest percentage since March.
Male investors, who outnumber females in the Spectrem indices, decreased their interest in all components other than bond mutual funds, and that included a 5 percent drop in stock mutual fund investing. Those males not investing in the coming month, meaning those not increasing allocations, rose to 35.3 percent.
Republican vs. Democrat
Their president told them not to worry about a recession, so Republican investors did what they were told, and increased their interest in August in stock, stock mutual fund, individual bond and bond mutual fund investing. Among Republican investors, those not investing fell to 29.07 percent, the lowest percent since March.
But, based on voting preferences, Independent investors decided recession concerns were real, and dropped their intentions to invest in stock, stock mutual funds and individual bonds, but doubled their interest in bond mutual funds to 10.98 percent, more than double their interest from one month prior.
Investors who lean to the Democratic party increased their interest in individual stock and individual bond investing, and like all other political segments, dropped their percentage of those not investing to 42.11 percent.
Working vs. Retired
Investors who are still in the working world decided in August that they wanted to invest more, and increased their investment allocations in all components other than individual stocks and real estate. But that included a 13 percent jump in cash investing, from 23.0 to 36.6 percent. Among working investors, there was also a large decrease in those not investing, to only 21.4 percent, the lowest percentage of 2019.
Retired investors, whose portfolios change less dramatically than the portfolios of working investors, expressed increased interest in individual stock and individual bond investing, but retired investors not investing in the coming rose to a 2019 high of 57 percent.
©2019 Spectrem Group
Keywords: investors, recession, advisors, Spectrem, stocks, mutual funds, bonds, cash, not investing