Tumult Too Much For Investors
There was a lot going on with the stock market, the American economy and global negotiations in October, and the Spectrem Confidence Indices reflected the sentiment of investors who may be waiting for some matters to settle down.
The SMICI dropped 13 points in September and another 4 points in October, falling to 3, matching the low mark set in May of 2017. The SMICI has been in single digits for six of the last seven months, and prior to that it was in double digits for nine consecutive months.
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 September investor fielding took place between October 19 and 25, 2018.
In October, Millionaires backed away from Stock Investing, down to just 32.8 percent of investors who planned to add to their individual stock market investments. Stock Mutual Fund investing, Individual Bond and Bond Mutual Fund investing, and Cash Investing all rose among Millionaires. At 30.5 percent, the Cash investing among Millionaires was at the highest level since October of 2017.
Among non-Millionaires, interest in investing dropped across almost all categories, and there was a 12-point drop in Stock Investing to 22.1 percent. That drop was large primarily because Stock Investing among non-Millionaires rose by almost 19 points from August to September.
Not Investing indicates those investors who are not going to extend their investments beyond its current level in the coming month. Among Millionaires, those Not Investing dropped to 26.6 percent while among non-Millionaires it rose to 45.1 percent.
The Spectrem Household Outlook, a measure of the long-term confidence among investors in four financial factors which impact a household’s daily life, fell to 28.00 among all investors, but it dropped almost 20 points among Millionaires, from 33.02 to 13.67. That is the lowest Outlook among Millionaires since October of 2016, prior to the most recent Presidential election.
All four components of the Household Outlook fell in October, and the Outlook for the Economy dropped into negative territory overall for the first time since October of 2016. Among Millionaires, the Outlook for the Economy fell 34 points to -11.72, the first negative rating in that category for Millionaires since October of 2016.
- The Millionaire Confidence Index appears to be trending downward, falling 17 points in the last two months. With an SMICI at 3, the Millionaire Confidence Index is at its lowest point since May of 2017.
- May of 2017 was also the last time the Millionaire Confidence Index was below the Affluent Confidence Index. At that time, there was concern that President Donald Trump would not be able to deliver on the tax cuts he promised in his campaign (and which he did deliver at the end of 2017).
- The SAICI also fell 2 points to 4, marking the seventh consecutive month the Affluent Confidence Index sat in single digits.
- Stock Investing, the component which best indicates confidence in the stock market, dropped to 27.6 percent among all investors, hitting 32.8 percent among Millionaires and 22.1 percent among non-Millionaires, a 12-percent drop from the previous month. But the non-Millionaire Stock Investing percentage normally sits between 20 and 30 percent.
- Bond Investing, which indicates safety in investing when it is on the rise, rose by 2 percent among all investors to 12.4 percent and rose almost 6 points among Millionaires to 17.2 percent, the highest percentage of interest in increased bond purchases since February.
- The percentage of investors Not Investing in October, meaning those who have no plans to increase their allocation of funds for investing purposes, fell slightly overall, but was driven by a 7 percent rise among non-Millionaires. There was a competing 8 percent drop among Millionaires, meaning the wealthier investors plan to invest, but apparently, they are going to do so in safety products.
- The Spectrem Household Outlook, which measures investor attitudes about four economic factors in their daily life, dropped overall from 30.2 to 17.5, almost 13 points, That is the largest decrease in the Household Outlook over one month since December 2015 to January 2016, and the first time the Outlook has been below 20 since June of 2017.
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