Five years after the S&P 500’s lowest point of the Great Recession, a third of investors still remain skeptical about putting their money in the stock market, according to a TNS survey commissioned by Wells Fargo Private Bank. But more than half of those surveyed (55%) said they would not react any differently in another bear market. Only slightly more than a quarter (28%) said they made major changes to their portfolio.
“Since March 9, 2009, the S&P 500’s total return has gained more than 200%, and for those who sat out, they missed a great opportunity,” said Dean Junkans, chief investment officer for Wells Fargo Private Bank. “On the other end of the spectrum, we are seeing some irrational complacency with the bull run. Some investors are unaware of interest rate risks and have not adjusted to how they go about investing.”
A major challenge for investors is that they may not have adequately adjusted their investment portfolios to address longer life expectancies and the increased time horizon they will need for their retirement, said Junkans.
“Only 13% of those surveyed said longer life spans have caused them to be more aggressive, while 87% are either more conservative or have not made any changes. Investors need to gain a better understanding of their future needs,” Junkans said. “Despite the market reaching record highs this year, 21% of the survey respondents who remain wary of the market said nothing would get them to add more stocks to their portfolio.”TNS conducted the survey of more than 500 affluent investors ($500,000+ in investable assets) February 6 – 12, 2014, to understand investor sentiment in the current environment, investor thoughts on the bear market from 2008 to 2009, and how they may have changed their investment strategy. According to Junkans, the survey results give great insight into how much more investors need to learn about wealth planning, as well as the importance of identifying goals and sticking to them. “Investors’ confidence needs to be rooted in a conviction that they’re taking appropriate risks to meet their long-term goals. Without that conviction, emotional investing and reacting to the daily news are a road to failure,” said Junkans.