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Investopedia
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Despite recent volatility across the stock market and in other assets, most individual investors remain somewhat optimistic about their portfolios, according to Investopedia’s latest survey.
Sharp downturns in major stock indexes over the first two weeks of August may have rattled individual investor confidence, but most remain relatively optimistic about their portfolios. According to Investopedia’s recent survey of its readers, nearly two-thirds describe their sentiment as “optimistic” or “cautiously optimistic.”
While that level of optimism is slightly lower than was registered in June, 42% of those surveyed said they ‘bought the dip’ during the first two weeks of August, while 26% expect higher returns for the market over the next six months. Less than one-third describe themselves as ‘worried’ about recent market events.
While investors mostly feel optimistic about the markets, renewed concerns about a potential recession appear to be curbing their enthusiasm, albeit slightly.
Just over a quarter of respondents are expecting stock market returns of over 5% in the next six months, an eight percentage point drop from June. Meanwhile 27% are expecting another correction—a drop of 10% or more in the S&P 500—over the next three months.
Of those expecting another drop in the stock market, nearly three-quarters think the decline will be tied to a recession, while two-thirds believe that high valuations will be to blame.
As for those concerns about overvaluation, investors continue to point to artificial intelligence-related stocks and mega-cap tech. That sentiment has been consistent, and barely unchanged for the past year as stocks like Nvidia (NVDA), Super Micro Computer (SMCI), and Meta (META) have delivered exceptional returns that have stretched their valuations.
Forty-four percent of respondents still feel cryptocurrencies are overvalued, while less than 30% think housing stocks are overheated.
The upcoming presidential election has topped our list of investors’ biggest concerns for the past several months, and the recent shake-up of the Democratic ticket has only made that event even more uncertain.
While the election is still our readers' top concern, the recent uptick in unemployment and a slowdown across some sectors of the economy like manufacturing has spurred worries about a possible recession.
Hopes for a so-called ‘soft landing’ engineered by the Federal Reserve’s handling of interest rates appear to have faded slightly as 61% of respondents think a recession is likely in the next twelve months. That’s a nine-percentage point increase from June, and it’s not a surprise that a recession is now respondents' second biggest concern, followed by an escalation of the conflict in the Middle East.
While investors may be worried about the election, inflation, and overvaluation, it would not deter many of them from buying more individual stocks if they had an extra $10,000 to spend. Individual stocks remain the top choice of our respondents, as they have for most of the year, followed by ETFs and stock index funds. CDs were their top choice throughout most of 2022 and 2023 as the Federal Reserve was raising interest rates to battle inflation, but with the prospect of lower interest rates on the horizon, investors are in search of higher yields from equities and equity-related products.
Investopedia’s readers are as consistent as they are loyal to their favorite stocks. While many believe that the Magnificent 7 and large-cap A.I. stocks are overvalued, those stocks largely make up the majority of their favorites, according to our most recent survey. A notable return favorite into our readers’ top ten holdings is chipmaker AMD (AMD). Many of our reader favorites, including Apple (AAPL), Microsoft (MSFT), and Alphabet (GOOGL), are also among the most-widely held stocks in equity mutual funds, index funds and ETFs. Investors of all sizes have ridden these stocks to incredible gains over the past decade and are loathe to give up on them.
This survey was fielded online to Investopedia readers 18+ living in the U.S. from August 7-12, 2024. Readers must currently hold and manage investments to qualify. Participation in the survey is entirely voluntary; sample composition reflects U.S. 18+ reader base.
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Gistlegit
4 hrs
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VDM is facing severe criticism for his recent actions involving Prophet Jeremiah Fufeyin's miracle water, which he administered to Muslim beggars. This act has been met with significant outrage within the Muslim community, particularly in the Federal Capital Territory (FCT), where it is viewed as a provocative and insensitive gesture that disrespects the religious diversity in Nigeria.
Instablog9ja
4 hrs
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A medical doctor has recounted how a man slapped his wife because she failed to hold their child still while he was trying to insert an IV line into the baby.
According the man’s outburst left him shock as he reflected on how the dynamics of what he witnessed might play out in their marriage.
Instablog9ja
5 hrs
11
Christian Obi, a former Nigeria goalkeeper and head coach of Heartland FC, has di3d in a ghastly accident.
The fatal accident occurred on Friday, August 23, at Umunna, near Okigwe, Imo State, when the club’s players and officials were on their way to Abakaliki for the Ifeanyi Ekwueme TICO/SELECT Pre-season Tournament.
The club in a statement said: “The heart breaking day saw the Heartland FC team departing the Dan Anyiam Stadium, Owerri for the preseason Tournament with enthusiasm at around 3:30pm in three vehicles but at about some minutes after 4pm, one of the vehicles rammed into a carelessly parked truck in its attempt to evade an oncoming vehicle.
The driver tried as he could but the impact of the collision caused a sudden shock to our coach, Christian Obi who was unconscious with a slight injury to his right leg upon evacuation from the badly affected part of the bus.
Coach Obi and other injured players were rushed to the nearby hospital at Okwelle in Onuimo LGA of Imo State but despite the best efforts of the medical personnel our revered coach gave up the ghost.
Coach Obi remains have since been deposited at the Federal University Teaching Hospital, (FUTH) morgue in Owerri while the injured have been referred to the same hospital for more proper care.”
Aged 57, Obi, who coached the team last season, was a Nigeria youth international goalkeeper who competed in the Men’s Football Tournament of the 1988 Summer Olympics in Seoul.
Mark_
11 hrs
9
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Federal Reserve chair Jerome Powell spelled out in plain English what financial markets had already anticipated: The central bank is about to cut its benchmark interest rate.In a speech at the Jackson Hole Economic Policy Symposium conference Friday, Powell said it was time for the Fed to make a major shift in its economic balancing act in which it seeks to keep the fed funds rate high enough to prevent inflation from overheating and low enough to keep unemployment from rising. That means cutting the rate from its current range of 5.25%-5.5%, its highest since 2001, where it’s been held for more than a year in an effort to push inflation down.
“The time has come for policy to adjust,” Powell said. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”The Fed was already widely expected to cut the fed funds rate when its policy committee next meets in September. Recent economic data has shown that since 2022, the inflation rate has fallen from a 40-year high almost back to pre-pandemic levels. At the same time, the unemployment rate has steadily risen, fueling worries that the economy could enter a recession if interest rates stay high.
Financial market participants took Powell’s comments as a signal that steeper rate cuts are on the table.
Speculation focused on whether the Fed would open its rate cut campaign with a 0.25 percentage point cut or a steeper 0.5 percentage points. The odds of a larger cut rose to 34.5% late Friday morning, up from 24% the day before, according to the CME Group’s FedWatch tool, which forecasts rate movements based on fed funds futures trading data.
Powell used the speech to give a broad overview of the Fed’s fight against inflation since March 2022, when the central bank began raising its benchmark interest rate to counteract a worrisome price spike for consumer goods and services. The inflation rate peaked in June 2022 at an annual increase of 9.1%, according to the Consumer Price Index, and has fallen since then to a 2.9% annual increase as of July.High interest rates are meant to combat inflation by raising borrowing costs on mortgages, credit cards, car loans and other kinds of credit, discouraging borrowing and spending and allowing supply and demand to rebalance.
Indeed, the housing market has slowed to a near standstill under high mortgage rates, and consumers have struggled to afford vehicles amid high interest rates on loans, prompting price cuts from dealers.Powell highlighted another aspect of high interest rates: they’re meant to signal the Fed’s determination to push inflation down. The theory goes that if the public believes inflation will be low in the future, people will feel less pressure to make financial decisions that would push up inflation.
For example, if individuals believe inflation will stay high, they might make major purchases sooner to get ahead of price increases, stoking demand and prompting merchants to raise prices.According to surveys of public opinion, most people never believed inflation would stay high for very long, and Powell credited that psychological factor with helping inflation cool down without the recession or spike in unemployment that many economists had anticipated.
“Disinflation while preserving labor market strength is only possible with anchored inflation expectations, which reflect the public's confidence that the central bank will bring about 2% inflation over time,” he said. “That confidence has been built over decades and reinforced by our actions.”
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