The markets suffered another bumpy week in the post-midterm election period, with steep losses suffered by stocks. But if political headlines weighed on investors, it was more likely that the unresolved trade war with China was the reason rather than the reshuffling of House seats in favor of the Democrats.
Several headlines from the past week featured White House officials contradicting each other over trade negotiations with China and the potential implementation of additional tariffs in January. That back-and-forth may have contributed to losses of more than two percent for the Dow Jones Industrial Average and Nasdaq. But a recent survey suggests that wealthy investors are not focused on short-term politicals risks and are not making major changes to their portfolios in the post midterm election period, even if they expect volatility to remain elevated.
Only 9 percent of investors with at least $1 million in a self-directed brokerage account expect stock market volatility to decrease as a result of midterm election results that turned out as they expected. More millionaires expect volatility to remain the same (47 percent) or increase (44 percent), according to a survey conducted by E-Trade Financial between Nov. 7 and Nov. 12 among 900 investors who trade their own accounts (the results for the more than 100 millionaires included in this survey are provided exclusively to CNBC). Sixty-seven percent plan to make no changes to their portfolios as a result of the elections, the E-Trade survey found.
“These are more experienced investors, sitting tight and staying the course,” said Mike Loewengart, chief investment officer at E-Trade Capital Management. “Any near-term noise is never a good idea to make wholesale changes. Over longer periods of times these events are less meaningful.”
But the wealthy do believe there are headwinds for the economy that will hurt their personal financial situation and that are bringing stocks closer to the end of their decade-long run. The largest group of millionaires believe stocks have one to two years at most remaining before the end of this bull market. “That is considerably higher than what we saw in the overall survey or when we break down the results by Democrats or Republicans,” he said.
Loewengart said one mindset that has always distinguished wealthy investors is recognizing that good times can’t last forever. “There will be a pullback, there will be another recession, they are certain of it happening, but don’t know when.”
Overwhelmiongly expect vol to stay same or increase, to me that says recognize risks aboudn in market and which are sure you read about it trade issues, the one that really stands out is growing deficit that probably biggest risk that we face not so much fed raisingt rates bt more about our credit profikle as a country adn what that looks like sa evert growing deficit and notheirn on horizong to address it. If our deficit is increasing and its fair to assume we cant grow way out of problem even though some policy makers hopeing it will happen stands to reason that our creidt profile will change for thwe worse and as response rates will go up throughout the globe (a question of what potential holders of US debt will demand to loan US money for vaiorus terms) and ifg see rates going up for that reason that puts more pressure n companies and costs indivudlas faces, if everything assets priced off of benchmark t yeilds tat causes people to reassess opportunity costs.
A little bit more neative on the PF stuff. What is pmacted new congress will have on debt you pay 56 percent said no impacy yet 26 percent somewhat negative and 5 percen very negative, believe rates go up as a result of this new congress. The wya i intepret is we have to dont know if only or specific to democrat ongress wilolcause this, its that recognize that rates going up, and if growth still modest that has potential to create inflationary pressure, it has potential to cause ;prices of goods to go up as those additional costs passed on to consuemrs.
To me ties into earlier questions, these are investors not first time to rodeo and recognize that changes on political landscape wont have tat big inmapctr on investment over time (investment can do well under dems and republica (buffett said that) greater reocngion that divided govt should slw pace of legislation and create more certainty.
Trade just how deep trade war goes will deternmine some influence on direction of eocnomy but it still seems to me right now, they recognixinr tjhat at his stage int rade war much is negotyiation an posutirin aond hope agrremen will be reached and i think trump recognizing that as well, especially since he ahs to deal with additiona check in form of house, he wants to resolve sooner arather than later too
Bloomberg, i think when look at this and this list of celebrity, bloomnerg and dimon are accompliahed businessmen who i think many of these peopl identigy with.
Finan cials popu;ar as sector rising raters and yield curve good for banks, energy these millionairea are niot as enthralled with energy as rest of survey , 37 percent still into tech, my thoeryr on this is that lots of millionaires benefited form lots of tech stocks. Whe i think about equities outperforming ove rpast decade and growqth versus value and couple with active versus passive has bene challenging envionement for active managers.
If we see materials and commodiditrs prices and oil falling that is more view as assesssment of global demand, its not no matter depsite what goes on wiht politics or policy still these reallty broad macr force swhihc will have bigges impact.
E-Trade also asked these investors about the long list of celebrities rumored to be considering a presidential run in 2020. The results were not surprising: a group of Americans with large market portfolios put the two best-known market figures at the top of their ballot: Michael Bloomberg and JP Morgan CEO Jamie Dimon. But a market figure whom many people believe is among the most serious about a run, Starbucks founder Howard Schultz, fared even worse than The Rock and Oprah.