Millionaires sour on US economy
Investors brace for the end of the bull market
Millionaires are the most cautious they’ve been on the direction of the economy since the years leading up to the global financial crisis.
Investor sentiment on the economy for the next 12 months dropped 14 points from a year ago to -7, its lowest level since 2006, according to Fidelity Investments’ annual Millionaire Outlook Confidence Index. That marked its lowest level since the index began that same year.
Fidelity’s 11th Millionaire Outlook Study surveyed 2,026 investors, including 1,102 millionaires and 924 investors that Fidelity calls the “millionaires of tomorrow.” The study focused on five measures for its confidence index: the economy, the stock market, real estate values and consumer and business spending. The outlook wasn’t taken in 2007, 2011 and 2015.
The latest data signal that some wealthy investors are skittish about the longevity of the 10-year economic expansion, even as job creation remains robust and stocks touch record highs.
“Investors have seen such a positive run in the economy and the stock market since the Great Recession,” said David Canter, head of the registered investment adviser segment at Fidelity Clearing & Custody Solutions. “The lower outlook is a function of investors wondering when this ride is going to slow down.”
The survey was conducted in August during a turbulent third quarter as stocks came under pressure because of recession fears. To be sure, recent signs have pointed to a strong U.S. economy; job creation strengthened in November, and unemployment fell to a half-century low.
There wasn’t a clear reason why some Wall Street pros have grown skeptical.
Fidelity’s study revealed that investors’ confidence in their personal finances has dimmed as their concerns mount about where the stock market is headed, their retirement savings and their debt management, according to the survey.
Some money managers said they scaled back exposure to risky assets such as stocks after prices increased to all-time highs in recent months.
“It’s been a hell of a year,” said Brian Sterz, portfolio manager at Los Angelesbased Miracle Mile Advisors. “We’re waiting for stocks to cheapen up, and they inevitably will.”
Concerns about health were the leading causes of stress for millionaires and non-millionaires alike. More than onethird of investors polled by Fidelity have health-related worries, which accounted for the largest proportion of their overall stress.
Health care costs continue to rise. A 65-year old couple retiring in 2019 can expect to spend $285,0001 in health care and medical expenses throughout retirement, compared with $280,000 in 2018, according to Fidelity’s annual Retiree Health Care Cost Estimate. For single retirees, the health care cost estimate is $150,000 for women and $135,000 for men, the data show.
“People are living longer and retiring earlier,” Canter said. “Paying for health care is a top financial concern for investors of all asset levels.”
“Investors have seen such a positive run in the economy and the stock market since the Great Recession. The lower outlook is a function of investors wondering when this ride is going to slow down.” David Canter Head of the registered investment adviser segment at Fidelity Clearing & Custody Solutions