President's Letter - What's Up?
Fox Business Channel just ran a segment about how the RV industry is benefiting from the Coronavirus shutdown. Because Americans are cautious about airplane travel and not interested in international travel, people are purchasing RVs for vacation purposes. Many are planning to explore the U.S. for summer travel.
Despite the primarily pessimistic mood about the economy, there are individuals that have a somewhat optimistic outlook - perhaps investors are beginning to see a light at the end of the pandemic tunnel. In our recent installment of our research, Corona Crash: What Advisors Should be Saying to Investors Now*, Spectrem asked investors with $100,000 to $25 million of net worth how long they believe it will take for the economy to recover from the pandemic. Just over a third believe that the economy will recover within a year while a similar percentage believe it will be one to two years before the economy recovers.
There are similar signs of optimism regarding what will happen with the stock market. While only 10 percent believe the market will return to the levels it was at prior to the market crash, 42 percent of investors do believe the market will continue to increase. This is based upon research conducted in early April. Spectrem currently has similar research in the field and we believe that these numbers may even be more positive in May.
Not surprisingly, Republicans are more optimistic about a market recovery than Democrats or Independents. For more information about how the election may impact investor attitudes check out our complementary monthly report Wealthy Investors and the Election: A Guide for Financial Advisors in 2020*.
Other indications that many investors foresee an upswing in the markets comes from our recent report Evolving Investor Attitudes and Behaviors*, in which roughly 20 percent of investors, regardless of age or net worth, indicate they have purchased equities in the last two months. This is generally a larger percentage than have sold equities since the onset of the crash.
While it will undoubtedly take time for our lives to return to normal or even a “new normal”, with the potential re-opening of the economy, investors will soon begin to increase their optimism even more. Spectrem will keep you informed as we move forward through the next few months.
*Indicates report is included in Spectrem research subscriptions.