71% of Investors Feel Good About the Stock Market—Here’s What They’re Investing In
Key Takeaways
- 71% of respondents described their mood toward the markets as either optimistic, or cautiously optimistic, according to Investopedia’s latest sentiment survey.
- One-third of respondents are expecting gains of up to 5% or more for the stock market in the next six months.
- Over half (58%) are worried about the upcoming presidential election impacting their investments.
- Nearly one-third, or 30% of respondents, indicated they’re leaning more into ETFs in recent weeks, a 7 percentage point increase from August 2024.
According to Investopedia’s latest survey, individual investors are feeling as optimistic as they have all year, boosted by more record highs across the stock market and lower interest rates for the foreseeable future. Nearly three-quarters, or 71% of respondents described their mood towards the markets as either optimistic, or cautiously optimistic, while less than 20% described themselves as hesitant or skeptical.
Respondents also reported they’re leaning more into ETFs and are less worried about the economy going into a recession, but the impact of the upcoming presidential election on their investments remains a top concern.
Investors Aren’t Changing Strategies Right Now
These investors are not making broad changes to their strategies, even with new record highs across the stock market. Over half (57%) said they’re not changing their risk profile, while less than one-third, or 29%, said they’re making safer investments. Just 13% of respondents indicated they’re making riskier investments given recent market conditions, a 5 percentage point increase from August.
Concerns about the health of the stock market are also at a multi-month low, with just 31% indicating that they’re worried—a 12 percentage point decline from the same time last year. One-third of respondents are expecting gains of up to 5% or more for the stock market in the next six months.
The Election Tops Investors’ Concerns
Investors have had plenty to worry about in 2024, but the upcoming presidential election has been at the top of their list for most of the year. Over half (58%) are worried about the election impacting their investments. Among the 1 in 5 (19%) who are expecting a drop of 10% or more over the next 3 months, most say it’s because of the election, either due to potential civic unrest surrounding the election or the policy implications of the election results. That said, about one-quarter of respondents said the election results won’t make a difference on their investments. The escalating conflict in the Middle East is their second largest concern, followed by a potential recession in the U.S., China and U.S. relations, and inflation.
Investors Are Leaning More Into ETFs
As the hottest stocks of the first half of 2024 such as Nvidia (NVDA), Super Micro Computer (SMCI), and Meta (META) have cooled off considerably, individual investors have been gravitating more toward exchange traded funds (ETFs) to invest in the stock market. Nearly one-third, or 30% of respondents indicated they’re leaning more into ETFs in recent weeks, a 7 percentage point increase from August. That’s a small, but notable increase as investors may be seeking more diversity and balance in their portfolios after the burn of recent volatility, and the rise in the broader market beyond A.I., semiconductor, and the Magnificent 7 stocks.
Where Investors Would Put an Extra $10,000?
Individual stocks have topped the list nearly all year for what respondents would do if they had an extra $10,000 at their disposal, and that trend has continued. One in five readers said they’d put an extra $10,000 into stocks, but ETFs were a close second. ETFs have been on the rise over the past two months, and are only two percentage points behind individual stocks. That mirrors respondents’ recent pivot to ETFs in terms of what they have been investing in lately. As the ETF industry and issuers of exchange traded products ramp up their rollouts of actively managed ETFs, individual investors will have a lot more choices among these products in the coming months and years.
Which ETFs are Investors Choosing?
Individual investors like to run with the herd—especially during bull markets like this one. When asked which ETF they would choose to buy and hold for the next decade, the largest and most liquid ETFs topped the list, led by Vanguard’s VOO and SSGA’s SPY, which track the S&P 500, and Invesco’s QQQ, which tracks the 100 largest and fastest growing stocks on the Nasdaq. Combined, these three ETFs have more than $1.5 trillion in assets under management, which is roughly 10% of all ETF assets under management.
Investopedia Readers’ Favorite Stocks
Similar to ETFs, Investopedia readers, and most individual investors in the U.S. favor the biggest, most widely-held stocks on the planet. Those include most members of the so-called Magnificent 7, including Nvidia, Apple, Microsoft, Meta, Amazon and Alphabet. In this latest survey, Nvidia (NVDA) claimed the top spot in their portfolios, dethroning Apple (AAPL) for the first time since Investopedia began its survey in 2020. Shares of Nvidia have risen 144% so far in 2024, and are up a staggering 2,670% in the past five years, which explains the attraction. What’s notable is that shares of the chipmaker, which has become the poster-child for the A.I. revolution, have fallen 10% from their highs from earlier this year with most of that decline occurring in the past two months. Survey respondents may believe that it is oversold.
Is A.I. Overvalued? Readers Think So
Even though Investopedia’s survey respondents are generally optimistic, they are aware of areas of frothiness across the capital markets. A.I. stocks continue to top the list of sectors or themes that may be in a bubble according to respondents, followed by mega-cap tech, and cryptocurrency.
While they may be sensitive to higher-than-average valuations in many of these sectors, that hasn’t stopped them from owning and continuing to invest in most of them, given their responses to the survey questions.
Investors’ Fed Approval Rises
As inflation continues to subside and the Federal Reserve embarks on its new recalibration of monetary policy by lowering interest rates for the first time in four years, individual investors are warming up to the central bank’s attempts to engineer a soft landing. More than half of respondents, or 53%, said they approve of the Fed’s handling of monetary policy. That’s a 12 percentage point increase since August, and among the highest levels of approval in the past twelve months. Less than one-third of respondents indicated that the Fed waited too long to lower interest rates. Recession worries are also lower—53% said there is a 50/50 chance the U.S. economy will slide into a recession in the next six months—a 12 percentage point drop since August 2024.
Methodology
This survey was fielded online to Investopedia readers 18+ living in the U.S. from September 20-23, 2024. Readers must currently hold and manage investments to qualify. Participation in the survey is entirely voluntary; sample composition reflects U.S. 18+ reader base.
- Age: 18-24 4% | 25-39 17% | 40-54 18% | 55-74 50% | 75+ 11%
- Region: South 38% | West 27% | Northeast 17% | Midwest 18%
- Gender: Man 83% | Woman 13% | Nonbinary or an identity not listed 1% | Prefer not to answer 3%
- Race/Ethnicity (multi-select): White 73% | Black or African American 6% | Hispanic, Latino or Latinx/Latine 6% | Asian 7% | Native Hawaiian or Other Pacific Islander 0% | American Indian or Alaska Native 2% | Middle Eastern or North African 1% | Another background 2% | Prefer not to answer 8%