When The Going Gets Tough, Investors Back Off



The Dow Jones Industrial Average lost more than 2,200 points from Dec. 3 to Dec. 18, and there was no economic news to indicate those points would be coming back by the first of the new year.

So it makes sense to hear that affluent and millionaire investors decided to back away from Stock investing in December, as shown by the results of the Spectrem Affluent Investor Confidence Index (SAICI) survey conducted Dec. 13-18, 2018.

Stock investing fell for the third consecutive month among all investors with at least $500,000 in investable assets. At 23.2 percent, new Stock investing dropped to a level not seen since December of 2013. Among Millionaires with $1 million in investable assets, Stock investing dropped to 27.8 percent,    the lowest level since May of 2017, and Stock Mutual Fund investing dipped to 33.3 percent, an 18-month low.

Among non-Millionaires, Stock Mutual Fund investing actually rose more than 9 percent to 26.6 percent, while Stock investing fell for the third consecutive month. At 18.5 percent, Stock investing among non-Millionaires is at the lowest level since August.

Investors Not Investing, the category of investors who simply state their intention to maintain their current investment levels or decrease it. Among both Millionaires and non-Millionaires, those Not Investing dropped slightly, indicating those who enjoy investing are still looking for investment opportunism despite the bad stock market numbers.

Here is a look at how the indices shook out based on segmented investors:


Millionaires vs. Non-Millionaires

  • Increased confidence among non-Millionaires balanced the overall decrease in confidence among Millionaires in December.
  • Millionaires decreased interest in all forms of investing except for Cash, the safest product in the index. Non-Millionaires saw increases in Stock Mutual Fund, Bond Mutual Fund and Real Estate investing. Sine August, Stock investing among Millionaires has fallen from 41.1 percent to 27.8 percent with incremental decreases in each of the four months.
  • December was the first month in the last quarter of the year to see positive gains among non-Millionaire investors, but the gains were only in the relatively safer forms of investing, the mutual fund categories. Cash investing among Non-Millionaires fell to 14.5 percent, the lowest level since June.

Men vs. Women

  • The overall pessimism about investing in December was not the sentiment reported from female investors, who were gung-ho about nearly all forms of investing in the final month of 2018.
  • Females most significantly increased investing in mutual funds, with Bond Mutual Fund investing rising from 5.6 percent to 15.2 percent and Stock Mutual Fund investing going from 23.6 percent to 30.4 percent.  There were slight increases in Stock and Individual Bond investing as well among female investors.
  • Men, on the other hand, increased investing in Stock Mutual Fund and Real Estate products, but reported a four percent drop in Stock and Individual Bond investing. There was also a 2 percent rise in those Not Investing, as that category has risen from 30.9 percent in September to 46.2 percent in December, and that is the highest level of non-participation among male investors in 2018.
  • Both the Affluent and Millionaire Confidence Index numbers for both males and females dove in December and among Affluent males it went into negative territory (-2) for the first time in 2018.

Republican vs. Democrat

  • Like with the male investors, the Republican affluent investors recorded a confidence index in negative range (-1) for the first time in 2018. Among Democratic investors, the Affluent and Millionaire Confidence Indices both rose slightly but remained in the negative range.
  • Republican investors showed decreased interest in Stock and Individual Bond investing (cutting Individual Bond investing in half to just 3.64 percent) while reporting increases in both Stock and Bond Mutual Fund investing. Republicans also reported a drop in those Not Investing, an indication of some optimism among those investors.
  • Democratic investors increased Stock investing by 12 points, to 29.5 percent, and increased Stock Mutual Fund investing as well, but turned away from Cash and both bond products listed. Their percentage of Not Investing remained under 40 percent at 39.34; Democratic investors have been more involved than Republicans for the past three months.

Working vs. Retired

  • Working investors are more likely to react to stock market indicators, and certainly did so according to the Spectrem index, with decreases in all investing options other than Real Estate. Working investors Not Investing rose to 35.5 percent, the highest level of the year.
  • Retired investors recorded drops in Stock and Individual bond Investing (which fell to a year-low of 3.1 percent). Almost 60 percent of retired investors said they were not increasing their investing for the coming month, and that is the highest level in that category for the year.  



©2018 Spectrem Group