More than seven months into the pandemic, and with a week to go before the election, investors find themselves in quite a paradox. On the one hand, there is the fear of missing out on more returns in the equity market. On the other, is elevated anxiety about the outcome and aftermath of the election and what that will do to their portfolios. Those are among the key takeaways from our recent survey of Investopedia readers, the fifth we have conducted since before the coronavirus was named a global pandemic.

Caught in the Neutral Zone

While our readers are slightly less bullish than they were in August, they are also slightly less bearish than they were in the summer. Since then, economies have opened up and growth is strong across most industries – although the labor market remains compromised – yet the virus is still very present in everyday life. Equity markets have trudged higher after rebounding out of the fastest bear market in history, and that has caused some concerns about stretched valuations in some stocks and sectors. 

The Election is the Overhang

The upcoming election remains the dominant concern among our readers. While they are split on who they think will win the election, they remain concerned about the impact it will have on their portfolios. They are also concerned about what will happen in the aftermath of the election and whether it will be contested and peaceful.

Staying the Course

Despite their worries, only one quarter of our survey respondents, who range in age and income across the U.S., are making changes to their portfolios. Most are sticking with the stocks and strategies that have carried them through this tumultuous year. Their favorite stocks (listed below) show that they have chosen wisely and safely.

Millennials are significantly more likely than boomers to say they're making big changes to their investments based on recent market events (25% vs 15). Among those making changes, Millennials are more likely to be investing more (45% of Millennials responding to the market say they're investing more money vs 18% of Boomers). They're also going riskier. 31% of Millennials making changes say they're moving into riskier investments vs 13% of Boomers).

Too Far, Too Fast?

62% of our survey respondents, regardless of age, think the stock market has become overvalued. 71% believe that the economy and the stock market are disconnected and 54% anticipate it could experience another significant drop in the next three months. The reasons for that are as described: The election, its aftermath, and the possibility of another economic shutdown.

They are also slightly concerned about President Trump’s use of social media as a communications tool and its impact on the stock market, as well as his health and the health of his administration. We fielded the survey just as the president tested positive for COVID-19 and was subsequently hospitalized.

Investors Keep the Faith in Their Favorite Stocks

Our readers have proven to be faithful investors when it comes to their portfolios. The top 10 holdings have remained fairly consistent throughout the pandemic, although there is variation among the different age groups of our readers. But the top three holdings – Apple (AAPL), Microsoft (MSFT), and Amazon (AMZN) – are also among the most widely held stocks in index funds, ETFs, hedge funds, endowments, and among retail investors. 

Millennials are even more likely to favor IT (49% vs 41% among Boomers) and Boomers are even more likely to favor healthcare (19% vs 12% millennials).

Older investors have held onto their favorite dividend paying stocks like Bank of America (BAC) and Verizon (VZ), as well as traditional media companies like Disney (DIS). Tesla (TSLA) investors are nothing if not loyal and they have stuck with the electric car maker through many peaks and valleys, although 2020 has mostly been peaks.

What’s Next?

The next few months are a big question mark for investors. The election is the obvious elephant in the room, but beyond that, the resurgence of the virus and another potential lockdown, concerns about social unrest, and the widening disconnect between the capital markets and the economy will cloud the horizon. Individual investors, like our readers, have different time horizons and goals for investing than institutional investors. They can mostly afford to be patient until the smoke clears on any one or all of those issues. Until then, expect them to stay in the neutral zone.