by David Templeton, Horan Capital Advisors
In a recent survey by the Investment Company Institute (ICI) it was noted fund investors are less likely to assume "above average" or "substantial risks" within their investment portfolios. The survey noted,
- "Since 2000, the share of baby boomers investing more than 80 percent in stocks in their retirement plans has dropped in half, to about 25 percent for 50-somethings and 21 percent for 60-somethings in 2011, the most recent data available."
- "But boomers nearing retirement and current retirees burned in the 2008 market collapse keep paring back their risk profiles. Older investors are moving “from capital appreciation to capital preservation,” said Shelly Antoniewicz, an ICI senior economist. Even 35-49 year olds, who still have two to three decades of investing ahead of them, are not quite back to where they were earlier in the decade when they were more willing to take risks in the stock market."
- "The exception is the under-35 crowd: 26 percent identified themselves as being in these higher-risk categories, slightly more than the 24 percent who did back in 2007."
Antoniewicz attributes the strong January flows to individuals investing year end bonuses as well as reinvestment of year end gains taken by investors to get ahead of potentially higher tax rates associated with the fiscal cliff.
In mid January investor sentiment as reported by the American Association of Individual Investors did spike above the average level plus one standard deviation, i.e., 52. Since this elevated bullish sentiment level in January sentiment has declined to 41.8 for the week of February 21, 2013. Investors do not seem to be overly bullish on equities at this point in time and sentiment is a contrary indicator.
Source:
Boomers Still Cautious About Stocks
By: Financial Security Project at Boston College
February 19, 2013
http://fsp.bc.edu/boomers-still-cautious-about-stocks/
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