These days, it turns there are a few canaries in the coal mine out there in the U.S. stock market sending retirees a specific message: get out now, while you still can.
That's especially true among the millionaire class. According to a new survey of affluent investors from the Chicago-based Spectrem Group, investor confidence in the stock market is "plummeting." The firm's Millionaire Investor Confidence Index fell 14 points in the recently-released survey, to a 38-month low.
Spectrem notes that its data roll out at a time when economic conditions look like they're deteriorating. "This month's survey was fielded between Jan. 15-21 amidst a backdrop of concerns about China's economy, falling oil prices, escalating tensions in the Middle East and claims by North Korea that it had tested a hydrogen bomb," Spectrem said.
"Global markets are continuing to experience high volatility tied to poor macroeconomic conditions and rising geopolitical uncertainty," added George H. Walper, Jr., president of Spectrem Group. "Affluent investors tell us that stock market conditions are the factor most affecting their current investment plans, followed by retirement needs and the overall economic environment."
Should U.S. workers saving for retirement take heed? It's a fair question, as investors are routinely reminded by Wall Street professionals to keep their money in the financial markets all the time. A "buy and hold" strategy, after all, supposedly guarantees you won't miss any market upticks, which happen more frequently than market downticks on a historical basis.
Whether or not that's an ironclad truth or not, some financial experts advise to consider the source when given anonymous investment advice - and instead, stick to your own long-term savings plan.
"U.S. millionaires who may be down on the stock market are no different than average everyday Americans - all are genuinely and understandably concerned about their financial well-being and how best to navigate the challenges of the current marketplace," said Kevin Smith, executive vice president and founding partner of Smith, Mayer & Liddle, a wealth advisory group in York, Pa.
Although there's a perception that millionaires are more knowledgeable about financial markets than the typical investor, such a perception is generally not rooted in reality, Smith adds. "Wealthy investors are still subject to similar behavioral and emotional biases as other investors," he said. "Thus, a study showing that U.S. millionaires are down on the stock market should not be given any undue weight or credibility since, based upon recent market events, a study of any investor demographic would likely reveal that they are down on the market too."
As for any specific moves retirement savers should make, Smith reminds savers they're on a different financial path than the millionaire class, and should act accordingly. "The affluent typically have a luxury that regular Main Street retirement investors don't have - they've already accumulated a sizable retirement nest egg and might prefer the safety and security of high quality bonds, to preserve and protect the level of wealth they've attained," he explained. "They generally are less concerned about growth and more concerned about capital preservation."