Investors Believe - Again - Spectrem's Investor Pulse

2/1/2020

Most investors take numerous factors into consideration when they make their investment decisions or alter asset allocations: current economic conditions, current stock market results, personal financial issues, financial advisor advice, and so on.

Over the past year, the stock market has been on a steady, if not completely consistent, climb out of the low rung it was on in December of 2018. From Dec. 31, 2018, to Dec. 31, 2019, the Dow Jones Industrial average grew by more than 22 percent.
From Dec. 31, 2019 to Jan. 17, 2020, the DJIA went from a close of 28,538 to a close of 29,348, an increase of almost 3 percent in less than three weeks.
For the month of January 2020, the Spectrem began its monthly survey for the Spectrem Investor Confidence Indices on Jn. 17, when the stock market was again reaching new heights.
The Spectrem Investor Confidence Indices show how confident investors are about the stock market as well as their general outlook over their personal economic situation.
For January, the resulting indices showed that, unlike other months over the previous 12 when both confidence was shaky and outlook uncertain, investors were all in.
The numbers reflect the attitude investors took toward the stock market and the economy. The Spectrem Millionaire Investor Confidence Index (SMICI®), which reflects the sentiment of investors with $1 million in investable assets, rose from 1 to 15, reaching a mark not reached since August of 2018. The Spectrem Affluent Investor Confidence Index (SAICI®), which reflects the opinions of investors with a level of investable assets above $500,000, rose from -2 to 8, also reaching a height last seen in August of 2018.
But those are just the numbers. There were numerous events which caused investors to be so positive in January when they had held back time and again throughout 2019.
• One likely event which most investors experienced in January was a chance to look over their annual financial statements from investment accounts. Those statements likely showed huge growth in the value of accounts which were impacted by the growth of the stock market. The rate of return on equity investment in 2019 most likely outshone the growth of cash or bond investments, and investors noted that the conditions which created that equity growth still remained when they were surveyed by Spectrem.
• On Jan. 12, the first of what may end up being several trade deals between the United States and China was signed by President Donald Trump and a representative from the Republic of China. While informed observers of global trade warned that future negotiations remained uncertain, the relaxed atmosphere around the relationship created yet another reason for investors to be positive about current investment strategies.
• President Trump also promised in mid-January (and delivered late in the month) his signature on the new trade deal between the United States, Mexico and Canada. The updated NAFTA agreement was a bipartisan agreement among U.S. legislators, an unlikely success in the partisan political atmosphere of Washington in 2020.