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Gauging Investor Opinion

Despite positive opinions about the economy, investor optimism has dropped, according to the latest Wells Fargo/Gallup Investor and Retirement Optimism Index [1]. The Index fell to 85 in Q2 2019, down 18 points year over year.

Over half of investors surveyed, 61%, state that the economy is “booming” or “solid,” but many fear a coming recession. 51% of investors say a recession will begin either later in 2019 (11%) or in 2020 (40%). However, a clear majority — 66% — say they are “prepared” for how they will handle their investments in the event of a recession. According to Wells Fargo, 65% of investors say now is a good time to invest, but about half of investors (51%) predict that the next U.S. recession will occur either sometime later this year or next year. However, the majority of investors say they feel prepared for how they would handle their investments in the event of a recession

“It is good to see that two-thirds of investors feel they are prepared to handle their investments during a recession,” said Tracie McMillion, Head of Global Asset Allocation Strategy for Wells Fargo Investment Institute. “While we do not see a recession in the near term, in many ways we are still recovering from the last one — which left a deep scar on many investors. This sense of preparedness is a positive sign.”

According to a Gallup poll [2], it’s real estate, not stocks, that are considered to be the best investment. The poll indicates that 35% of Americans believe real estate to be the superior long-term financial investment, compared to 27% who say stocks are the better investment.

Stock ownership has not quite reached pre-recession levels, and previous Gallup analysis showed that stock ownership has declined among most major U.S. subgroups since before the recession, with the exception of upper-income and older Americans. Gallup notes that their poll was conducted April 1-9, in the midst of a bull stock market and that with home values higher than they were before the recession, noting the likely returns.