U.S. investor optimism perked up in the fourth quarter, according to the Wells Fargo/Gallup Investor Optimism Index, pushing the index score up to 84 from 72 in the third quarter. It is now on par with an 85 score in the second quarter.
The index, which had an adjusted baseline score of 100 from when it was established in October 1996, peaked at +152 in January 2000 and hit a low of -81 in February 2009.
For purposes of the study, the American investor was defined as an adult in a household with stocks, bonds or mutual funds of at least $10,000, either in an investment account or in a self-directed IRA or 401(k) retirement account.
“With a mix of encouraging and discouraging economic news, investors chose to focus on the positive, lifting their confidence in the economy as well as their own financial outlook,” Adam Taback, deputy chief investment officer for Wells Fargo Private Bank, said in a statement.
The index results were based on a Gallup poll conducted among 1,696 U.S. investors from Oct. 7 to 13 as the stock market was making modest gains. The survey closed after the federal government’s monthly jobs report, which showed that hiring had eased in September amidst the ongoing trade war, but that the unemployment rate had fallen to a 50-year low.
According to the report, investor optimism on the index’s economic dimension inched up to 20 after having slumped to 16 in the third quarter from 35 earlier in the year, but remains weaker than it has been in some time.
By contrast, investor optimism on the personal index has held firm each quarter. In the current survey, it increased eight points to 64, bringing the personal dimension to its highest level in more than a year.
The latest poll showed that optimism rose about the same between retired and non-retired investors, with retirees continuing to express the greater optimism.
According to the new survey, 85% of U.S. investors said their investment plan was on the right track, and 71% said they were prepared for a market correction. Thirty-five percent of non-retirees and 30% of retirees reported that fear of a market correction was causing them stress.
However, nuances emerged when researchers looked more closely at the percentages of those who said they strongly agreed that their investment plan was on the right track and that they were prepared for a correction.
Only 32% of retired respondents and 23% of non-retired ones expressed total confidence that their investment plan was on the right track. Similarly, confidence in being prepared for a market correction plummeted to just 14% of those who were in strong agreement.
At the same time, investor anxiety registered a mere 5% when defined as those who strongly agreed that fear of a market correction was making their life stressful.
“While investors appear broadly confident about their retirement planning, most non-retirees and nearly half of retirees do harbor some doubts they are headed for success,” Taback said.
“The same can be said for investors’ readiness for a market correction. While vast majority generally agree they’re prepared, most fall short of expressing complete confidence.”
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