Investors are more bullish this Taurus season than ever. According to our survey of daily newsletter subscribers, retail investors are still as optimistic as ever, despite the usual anxiety investors feel when markets continue to top record highs. We have been monitoring them for the past year to gauge their sentiments, fears, allocations, and trust in U.S. equity market. They’ve never felt so empowered.
Stock Market
It is possible that the 75% increase in S&P 500 stock market since last March could be attributed to it. The acceleration of economic activity in light of the better-than-expected vaccination rollout has contributed to a sharp drop in COVID-19-related cases in the U.S.
Stocks seem to have priced in a lot of this as traditional fundamental metrics that determine fair value, such as the CAPE Ratio (or price-to-earnings), are at multi-year highs. While historically low, interest rates are rising alongside inflation.
However, none of this is enough to keep individual investors from investing in stocks. 48% of our readers are bullish, four times more than those who are bearish. Three-quarters of our readers are somewhere in the middle, while the overwhelming majority expect more gains.
Don’t worry…Be happy
Since November, stock market volatility has been almost non-existent. Since March, volatility as measured by the VIX (CBOE Volatility Index) has been in steady decline over the past 12 months. While there have been some flare-ups like the one in January 2021 it has been quiet despite the stock market’s constant climb to record heights.
57% of our readers are not concerned about recent market events and 64% believe they have a greater faith in the markets than they did six-months ago. Only 24% of our readers expect a significant market drop in the next three-months, compared with 68% last June, almost a year ago.
Bubbles, Anyone?
Perhaps it’s more like a bubble bath because our readers don’t hesitate to point out a couple if they see them. Sixty-one per cent of the respondents to our survey said they are in a bubble. However, they feel more like a warm jacuzzi and are comfortable swimming around in it.
They are seeing bubbles in Bitcoin, but mostly in cryptocurrency. 40% of respondents said cryptocurrency is in a bubble. 32% said stocks are in one. Dogecoin and residential real estate are both in bubbles. Ironically, Dogecoin, a pseudo-joke crypto token, has seen it’s price rise 17,400% over the past 12 months. While U.S. 31% of our readers believe that U.S. home prices increased 17% over the same period. Only 26% of our readers believe that SPACs are in a bubble.
Stock Picking
Investopedia newsletter subscribers are savvy investors. They have been consistent in their stock and ETF selections and maintained discipline throughout the pandemic. 56 percent of our readers plan to keep investing the same amount for the next few months. 24% stated they will invest more and 20% said that they will invest less. One-third of our readers say they are looking for safer investments than stocks. Only 20% say they plan on being more risky.
Our most recent survey shows that ETFs are more popular than individual stocks. This is an interesting trend. Three quarters of respondents said they would invest more in ETFs than the 33% who intend to keep their stocks. Nearly 20% of respondents said they would be investing less in individual stocks, the same percentage that said they would be buying more cryptocurrency.
Worries
What is the Worries of Investors Beyond Bubbles?
Investments are not distracted by bubbles. However, policy is still a major concern. Stocks, 61% expect higher corporate taxes and 55% expect higher capital gains taxes. More than 40% of Americans expect the U.S. to set new records, while more than 40% anticipate higher levels of economic growth. 32% of our readers anticipate more fiscal stimulus. 18% expect the Fed’s imminent increase in interest rates. President Biden wants both to be raised to pay for more that $6 trillion in government spending programs to fundamentally reform the U.S. Lockdowns, and business closures due a resurgence COVID-19 are not a concern, thankfully.