Finimizers Are Seeing Boom Times Ahead, But Are You Getting Complacent?

Finimizers Are Seeing Boom Times Ahead, But Are You Getting Complacent?
Andrew Rummer

over 2 years ago3 mins

  • Finimizers are getting more and more optimistic about the outlook for stocks, company earnings, and the economy – arguably a contrarian signal to be more cautious with your investments.

  • Inflation is still among Finimizers’ top fears for markets, but you’re less worried about it than you were in the spring.

  • Enthusiasm for the likes of EV and meme stocks has cooled, but Finimizers are more excited than ever about bitcoin’s prospects.

Finimizers are getting more and more optimistic about the outlook for stocks, company earnings, and the economy – arguably a contrarian signal to be more cautious with your investments.

Inflation is still among Finimizers’ top fears for markets, but you’re less worried about it than you were in the spring.

Enthusiasm for the likes of EV and meme stocks has cooled, but Finimizers are more excited than ever about bitcoin’s prospects.

Mentioned in story

Finimizers are growing more optimistic about the outlook for stocks and the economy – and they’re more fascinated than ever by crypto, despite interest in electric vehicle (EV) and “meme” stocks waning – according to our latest Casual Investor Survey.

What did the Casual Investor Survey show?

We polled Finimizers’ opinions on a range of investing topics to coincide with the end of the second quarter, and received responses from 164 people between June 22nd and July 3rd. You can find the full results here.

Over the past three months, Finimizers have grown more optimistic about the prospects for both the economy and company profits. A net 70% now think the economy will be stronger a year from now, up from 66% in April. Likewise, optimism on company earnings has climbed to a net 63% from 56%.

Casual Investor Survey answers
“Net” percentage is the difference between the percentages of positive and negative responses

That optimism is feeding through to stocks, which a net 67% of Finimizers now expect to be higher 12 months from now, versus 57% in the last survey. Meanwhile, the proportion of respondents saying they’re taking less risk than normal with their investments dropped from 17% to just 9%. 

Casual Investor Survey answers

To top off this picture of positivity, fears of an inflation spike seem to have dropped off. The proportion of Finimizers expecting inflation to accelerate over the next 12 months dropped to a net 74% from a massive 81% last time around. 

Even so, inflation and COVID still dominate Finimizers’ list of potential market risks – although the pandemic has slipped from first place to second place.

Casual Investor Survey answers

What about crypto?

Surprisingly enough, Finimizers who took part in our first-quarter survey were remarkably ambivalent about crypto: just 5% of you thought bitcoin – which was hovering around $60,000 in early April – would be higher in a year. Since then, though, the OG crypto’s pulled back 40% from those levels, and more of you are now bullish: a net 27% thought bitcoin would be higher 12 months from now. 

Crypto was even more dominant in our survey’s list of the most-crowded trades. When asked, “Where do you see others investing their money most often at the moment?”, a third of you answered crypto – up from 25% in the last survey. Despite its recent volatility, it looks like crypto’s as popular as ever.

The same can’t be said for the sexiest parts of the stock market: tech, EV, and “meme” stocks like GameStop have all dropped way down the list of most-popular investments over the past three months. 

What’s the opportunity here?

Investors generally use these surveys of other investors’ sentiment as “contrarian” indicators: if people are a bit overexcited about a certain part of the market, it could – so the thinking goes – be due for a pullback.

Put in those terms, growing optimism about the economy and stock markets could be read as a contrarian bearish signal that the best days of both are already behind us. Consider yourself warned. 

That said, I proposed two contrarian trades following our last survey. The first – which suggested that the near-unanimity on accelerating inflation might be a sign to buy bonds that’d benefit if it didn’t – turned out well: the iShares 20+ Year Treasury Bond exchange-traded fund (ticker: TLT) is up some 7% since then. 

The second thought – that bitcoin probably wouldn't drop much until investors were more irrationally exuberant – didn’t go nearly as well, of course. Like all tools, contrarian investing based on sentiment has its limits…  

We plan to run a Casual Investor Survey every quarter from now on, so look out for the next one near the end of September.

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Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

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