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Millionaire investors are betting that stocks will take at least a year to regain their previous highs, according to the CNBC Millionaire Survey.
Despite the continued surge in the stock market since its March lows, millionaire investors remain skeptical of the market’s V-shaped recovery. A majority of millionaires surveyed said the S&P 500 will end the year down, according to the semi-annual survey, which polls 750 investors with $1 million or more in investible assets. More than a third said the market will end the year down 10% or more.
Nearly two thirds say it will take at least a year for markets to return to their all-time highs in February. One in four millionaires say it will take two years or more. The investment outlook by millionaires can have an outsized impact on the market, since millionaires own more than 85% of individually held stocks.
“They’re more cautious,” said Catherine McBreen, managing director of Spectrem Group, which conducts the poll with CNBC. “It’s not just the recession they’re looking at but also the election in November, which is also looming out there and hard to project.”
Over the next 12 months, millionaires plan to put only about a third of their money into stocks, according to the survey. They plan to put 19% into cash or cash equivalents, adding to their already high levels of cash holdings, McBreen said.
Fully 17% of their new money will go into fixed-income investments and the rest into commodities, private equity, hedge funds, collectibles and other investments, according to the survey.
When it comes to sectors, millionaires remain conservative. The sectors most likely to receive the most new money from millionaire investors in 2020 are health care, technology and financials. Fewer than 10% plan to invest in energy, materials or industrials.
Still, millionaire investors were opportunistic during the market declines. A majority bought or added to their positions in stocks, mutual funds and ETFs since March. Only 17% reduced their positions as the market bottomed, while 11% sold their entire positions.
“A lot of them remember missing the opportunity in 2009 when the market rebounded quickly, so they didn’t want to miss out this time,” McBreen said.