During this pandemic, it seems that many people are starting to invest, especially in the stock market. In fact, many rich people are actively investing in stocks. Wonder why?
The following are some of the results from the latest E-Trade Financial (Morgan Stanley Group) survey that show the current mindset of investors amidst the push and pull between risk and return.
1. Rich People are investing more and more
With the stock market conditions that have risen so high, this bubble phenomenon is inevitable. However, among these wealthy investors, even with the fear of the rising bubble phenomenon, the number of those investing is actually increasing.
“Wealthy investors don’t expect big returns expecting the market to rise by no more than 5% this quarter. But once the market strengthens, they are ready to set safe targets,” said Mike Loewengart, Investment Manager of the Capital Management Division of E-Trade Financial.
“As many as 59% expect in the next quarter, to be profitable on stocks that are included in the S&P 500 index, with 43% of them see their returns do not exceed 5%.”
They think the market will go down in the next quarter, correcting from 28% to 22%.
2. Want to Rotate Portfolios
The existence of this potential risk has made more investors change or rotate their portfolios.
Changes in portfolios to value-added, small-cap stocks and sectors that were depressed due to a pandemic such as energy and finance had already become a phenomenon predicted beforehand.
As many as 6% of a third have made changes to their portfolio allocations. It has increased for the second consecutive quarter. Meanwhile, 7% of it has converted its portfolio into cash, although currently it has increased by 5%.
3. “Work-From-Home” Stocks Have Started Fading
According to the survey, every investor who makes a portfolio change, they believe that diversification makes their investment safe.
“There is a momentum factor. People want to continue to believe where they have seen strong gains, it will continue, but some are realizing it cannot go up forever,” Loewengart said.
Although currently the financial sector has the potential to increase the most significantly. However, the technology sector, especially the health sector, has the potential to surpass the financial sector, because the vaccination factor is still very attractive to investors.
4. More Attractive Global Market Opportunities
Data shows that investment interest abroad is growing faster than the domestic market, because this rich man has long been involved in stocks on the Wall Street stock exchange, United States (US).
Rich people are more interested in investing abroad, because the yield is promising. Wealthy investors who are more interested in investing in global markets rose to 36% in the first quarter of this year.
5. US Political Tensions that Begin to Decrease
If political and election risks are a major factor in the 4th quarter of 2020, investors assume that in the first quarter of this year, US political risk will decrease. The survey makes it clear that investors are no longer worried about that.
Investors who are still worried about US political risks have decreased to 30% in the first quarter of this year. 12% are pessimistic about the positive outlook for the US economy under the Biden administration, while 60% are optimistic that Biden can change the direction of the US economy into a positive zone.
6. Do not want to be bothered to take risks
The latest phase of the bullish market, post-pandemic, has been marked by a new appetite for risk, such as the trend of increasing IPO (initial public offering) and new investment instruments, such as cryptocurrency (bitcoin).
Read now: European Central Bank President: Bitcoin is a Dangerous Investment
