Coffee Machine Conversations - Investor Pulse

2/1/2020

There are topics that have a longstanding status as a conversation piece (Coke vs. Pepsi, tacos vs. pizza, saving vs. investing), and then there are topics that are, for want of a better term, topical. Every month, Spectrem surveys more than 1,000 investors on the Hot Topics that are being discussed as co-workers waiting for the coffee to brew. They can also be discussed between advisors and their clients.

Here are some of the results from those recent one-off surveys:
Is The Stock Market Rational?:
There are two known characteristics of the stock market: 1) It reflects institutional investors more than Main Street investors, and 2) it does not necessarily reflect the state of the American economy.
Investors were asked to place their opinion about the rationality of the stock market on a 0- to-100 scale where “100” indicated “rational”, and among all investors, the response was at 42.29, well below the midpoint. It is fair to say investors lean toward the opinion that stock market results are not easily explained.
There were slight differences among investors when they were segmented by age. Millennials were inclined to place their measure right at the midpoint, 49.18, while Baby Boomers were more skeptical, placing their measure at 40.64.
Do your clients prefer to address their portfolio performances against stock market results, or do they prefer to consider consistent gains and rate of return? Discussing stock market results with your client can produce a wealth of understanding about how your client regards investing overall.
Interest in Emerging Industries:
Aiming investments toward a specific industry has been a mainstay of portfolio management since the beginning of American economics. Somewhere in the mid-20th Century, technology became an emerging industry, and early investors made massive gains that continue to pay off today. Those who waited to see how technology stocks performed missed out on a significant rate of return over time.
So, when a new industry pops up, some investors ask themselves, and their advisor, if this is the new IBM, or Apple, or Google. Space tourism is a topic that, literally, is reaching for the stars as an investment opportunity. Some very wealthy and influential people believe the human race must relocate in order to survive.
How do investors feel about investing in emerging industries? Using a 0-to- 100 scale of interest, the overall response was very low, at 25.47. Even among Millennials, for whom a new chance to get in on the ground floor is most appealing, rated their interest at 30.57.
While there is constant fluctuation among the current most popular industries for investment, there is always someone trying to create a buzz around a new investment product. Aggressive investors do not want to miss out. The role of advisors in such a situation is an odd one, wanting to appreciate enthusiasm for new markets while trying to protect investors from scam companies.
And the interest in space tourism as an investment option specifically? Thirty five percent of investors with a net worth between $100,000 and $250,000 described themselves as somewhat or very interested, and only 15 percent of those with a net worth between $15 million and $25 million had the same opinion.