Similarly, Gallup surveys also show a decline in investor stock holdings. According to these polls, during the decade before the financial crisis, roughly 60% of U.S. adults held stocks in their financial portfolios. But since the bull market kicked in five years ago, that ownership share has averaged around 55% – among the lowest ownership percentages since the survey began in 1998.
Market Realist – The graph above shows results of a survey conducted by Gallup in April 2014. U.S. adults were asked which instrument they preferred for long-term investment purposes. Only 24% said that they consider U.S. stocks (SPY) to be their long-term investment preference. 24% preferred gold (GLD). Most people preferred real estate (IYR) as their long-term investment. Only 6% preferred U.S. bonds (or BND) and Treasuries (TLT). 14% preferred saving accounts.
Market Realist – The graph above shows the results of a survey conducted by Gallup in January 2014. U.S. adults were asked their opinion on whether investing in U.S. equities (IVV) would be a good idea if they were given 1,000. 50% said that it would be a bad idea to invest in the stock markets.
The recession after the financial crisis of 2007–2008 made investors wary of investing in U.S. markets. The S&P 500 (SPY) fell almost 57%—from 1,576 in October 2007 to 676 in March 2009. It cost investors dearly. The recession caused ~62% of the investors surveyed by Gallup to think that stock market investment was a bad idea in 2009. Although the period of economic recovery boosted investor confidence, it’s still below pre-crisis levels.
Stock ownership, as surveyed by Gallup, stayed above 60% for 2000–2008. The percentage fell to ~50% as the recession took hold of the economy. It hasn’t recovered since. According to a survey in April 2014, 54% of the respondents owned stocks.
Continue reading the next part of the series to understand why investors fear holding stocks in their portfolio.