Main Street Investors Worry Global Conflicts Could Hit Their Investments
Geopolitical instability is the biggest concern for individual investors, according to a survey released Thursday, Oct. 9. The poll suggests that average investors are worried about hot spots that flared over the summer, such as Ukraine and Gaza, hitting their portfolios, even though those conflicts haven’t derailed the upward march of U.S. stocks since the ...
Geopolitical instability is the biggest concern for individual investors, according to a survey released Thursday, Oct. 9.
The poll suggests that average investors are worried about hot spots that flared over the summer, such as Ukraine and Gaza, hitting their portfolios, even though those conflicts haven’t derailed the upward march of U.S. stocks since the financial crisis.
The Dow Jones industrial average is up 2.5 percent, and the S&P 500 is up 6.5 percent since the beginning of the year. While the market has taken some significant short-term dives this year, they have often corresponded with news about the broader economy. On Tuesday, an IMF report lowering expectations for global growth sent the Dow plummeting more than 270 points.
The survey was conducted in mid-August by the Center for Audit Quality, an accounting industry trade group. Of more than 1,000 people polled, 75 percent said they were concerned about the risk that instability around the world could hurt their investment portfolios. And 42 percent said they were "very" concerned.
The next two biggest problems in the eyes of those questioned were financial regulation and cyber-risk in financial markets, according to the poll. Cybersecurity in relation to online banking transactions and access to investment portfolios also ranked high on the list.
The 1,049 respondents all had at least $10,000 in retirement plans or other investments, according to the Center for Audit Quality, which conducts the "Main Street Investor Survey" annually.
The poll also found that investors are more confident overall in markets, both at home and overseas, than they were last year. They were much surer of U.S. markets than international markets, but both saw a boost in 2014.
The percentage of people polled who had at least some confidence in international markets increased 1 percentage point over 2013 to 43 percent. That’s off from a high of 65 percent in 2007, the first year of the annual poll. The share of respondents who felt good about markets outside the United States paled in comparison with those who felt the same way about U.S. markets. Seventy-three percent of people said they were confident in American financial markets, a 4 percentage point increase over 2013.
For those who said they had little or no confidence in capital markets outside the United States, their top two concerns were "contagion" between domestic and international markets and instability. Fifteen percent of them said they were worried that problems from the United States could affect other markets and vice versa. Twelve percent said their negative opinions were based on political turmoil and unstable governments overseas; this figure is smaller than the percentage of respondents who said they were concerned about unstable governments overseas in 2013 (27 percent) or 2012 (15 percent). At least 10 percent answered either that they didn’t pay attention or didn’t know enough about overseas markets to have confidence in them.