Stocks' appeal may have dimmed after the recent end of the longest bull market in U.S. history, although they still maintain their rank as the second most valued investment., according to a new Gallup survey.
Real estate continues to rank first, while gold and savings accounts trail stocks.
Interest in stock and mutual fund investing has fallen to its lowest level since 2012, according to Gallup’s annual Economy and Finance survey, conducted April 1–14 among 1,017 U.S. adults.
Only 21% of Americans think stocks or mutual funds are the best long-term investment — down six points from 2019 — which is the lowest percentage recorded by Gallup since 2012.
The drop occurred among both high-income and low-income Americans, with a decline of nine points each from last year’s survey, while the percentage of middle-income respondents who chose stocks or mutual funds did not change.
Real estate, at 35%, remains the most favored investment to Americans, as has been the case since 2013, when the housing market was on the rebound. More than a third of Americans have named real estate as the top investment since 2016.
Roughly one in six Americans view savings accounts or CDs (17%) and gold (16%) as the best long-term investment. Gold finished first in 2011 and 2012, a time when real estate was seen as risky after the subprime mortgage crisis. But as stocks and real estate values have climbed in recent years, gold has faded — with the percentage naming it as the best investment now at about half of what it was 2011.
Relatively few Americans say that bonds (8%) are best. While savings, gold and bonds have each seen small, individually insignificant increases since last year, their collective seven-point increase in these non-stock investments illustrates how Americans' perspectives have shifted in this new economic environment.
Stockowners, themselves, have also soured on stocks or mutual funds as the best long-term investment — with the percentage naming stocks dropping from 37% in 2019 to 30% now.
As evidence of such public disdain for stock investing, investors pulled a net $33 billion from hedge funds in the first quarter, the most in more than a decade, Bloomberg reported.
The total is about 1% of of industry capital, and the largest quarterly outflow since investors yanked about $42 billion in the second quarter of 2009, according to a report Wednesday from Hedge Fund Research Inc. In all of 2019, investors pulled $43.1 billion.
Some of the industry’s largest names took a hit in last month’s market tumult, including funds run by Ray Dalio, Michael Hintze and Adam Levinson. The managers suffered losses as the coronavirus crisis brought much of the global economy to a standstill.
Still, a slew of firms are welcoming fresh money, hoping to buy the market dip and capitalize on those investors that may be ready to open their wallets to take advantage of the market dislocations.
“Investors reacted to the unprecedented surge in volatility and uncertainty driven by the global coronavirus pandemic with a historic collapse in investor risk tolerance and the largest capital redemption from the hedge fund industry since post-financial crisis,” HFR President Kenneth Heinz said in the report.
“While volatility and market dynamics remain fluid through early 2Q,” he said, “dislocations created by indiscriminate selling from traditional asset management have created significant opportunities for specialized long-short funds, which are likely to benefit both forward looking funds and institutional investors in coming quarters.”
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