With positive vaccine news and the U.S. elections in the rearview mirror, individual investors are primed for more returns despite record high COVID-19 cases across the U.S. According to our recent survey of our newsletter readers, 77% are expecting U.S. equities to deliver more gains in the next 12 months, with two thirds of them expecting gains of 5% or more.
We began regularly surveying our U.S. 18+ readers at the beginning of March before the pandemic was declared. Respondents for this recent survey are mostly 47 years or older, with half of them residing in the Southern and Western states. Since March, our readers have favored U.S. equities and continue to do so, regardless of the country's inability to contain the virus. China and emerging markets are their next choices for where they think market outperformance will come from. Those markets have outperformed U.S. equity indexes over the past three months, but all three have delivered robust returns since April.
Stocks or Bust
Our readers know where the returns have been and where they are likely to remain, as they heavily favor U.S. equities looking into the next year. Low interest rates, relatively low inflation, and continued outperformance from key sectors of the stock market, like tech, are making that the easy choice.
While Bitcoin has outperformed all “asset classes” in 2020, less than 10% of our readers believe in its ability to continue that trend. It may be its unpredictability or their unfamiliarity with the cryptocurrency, but whatever it is, most remain spectators.
Tech and pharma have been fan favorites among investors, and especially our readers over the past three months. Vaccine progress and the acceleration of the digital economy amid the pandemic have produced eye-popping returns for both sectors and our readers expect that to continue. The U.S. election results also paved the way for an expansion of the Affordable Care Act under the Biden administration, which may be why our readers also favor healthcare. The recovery rally has also boosted small cap stocks and about 10% of our readers expect that trend to continue.
The deadly resurgence of the virus this winter has made it the number one concern among our readers according to our survey. It’s been in the top two since the summer, but the grim realities of the seriousness of the pandemic are weighing on investor sentiment.
The Tax Man Cometh
While the election results may have opened the door to higher taxes under the Biden administration, a split Congress may derail that from happening, but it is still the second largest concern among our readers. They overwhelmingly believe the tax rate will eventually rise for high income earners and corporations, which could take a bite out of corporate profits and their own income.