Finimizers Have Spoken, And Boy Do You Folks Love Crypto…

Finimizers Have Spoken, And Boy Do You Folks Love Crypto…
Andrew Rummer

about 2 years ago3 mins

  • After a drop in sentiment in September, you’ve become even more pessimistic about the outlook for stocks, company earnings, and the economy.

  • The Evergrande debt crisis is yesterday’s news and you’ve all returned to fretting about the twin perils of 2021: Covid and inflation. Sigh.

  • Your love for crypto and bitcoin is growing with every passing month. But does the excitement herald that another pullback is due?

After a drop in sentiment in September, you’ve become even more pessimistic about the outlook for stocks, company earnings, and the economy.

The Evergrande debt crisis is yesterday’s news and you’ve all returned to fretting about the twin perils of 2021: Covid and inflation. Sigh.

Your love for crypto and bitcoin is growing with every passing month. But does the excitement herald that another pullback is due?

As the fourth quarter came to an end, we polled Finimizers’ opinions on a range of investing topics for our regular Casual Investor Survey. And this time around one theme stands out head and shoulders above​​ others: crypto’s the only thing keeping you guys relaxed right now.

What does this Casual Investor Survey show?

150 of you completed this survey – the fourth one we’ve done – between December 13th and December 16th (full results here), and it makes for rather glum reading. You’re much less optimistic about the economy, stock markets, and the prospects for company profits. Only bitcoin gets your vote of confidence. 

Just a net 6% of you now think the economy will be stronger a year from now, down from 28% in September and 70% in June (note that we use “net” percentages – the difference between the percentages of positive and negative responses – so we can compare one survey against another). Optimism around company earnings has also continued to tumble and inflation concerns – while still high – have eased a bit too.

Net proportion of respondents saying inflation, economic growth, or company profits will be higher in 12 months
Net proportion of respondents saying inflation, economic growth, or company profits will be higher in 12 months

Just like in September, that waning optimism towards the economy and corporate profitability is mirrored in your views on stocks. A net 25% of Finimizers now expect global stocks to be higher in 12 months, down from 29% in the last survey and 67% in June.

But what about crypto?

This is the one area of the survey seeming to generate some excitement. Bitcoin has been on a wild ride since our last survey at the end of September, soaring from low $40,000s all the way up to nearly $70,000, before crashing back to reverse most of those gains. But the volatility clearly hasn’t cooled your enthusiasm for the OG cryptocurrency: a net 54% of you expect bitcoin to be higher 12 months from now, up from 44% in September and just 5% in March. 

This trend is particularly stark when compared to your rapidly waning optimism about the stock market, as shown below. 

Net proportion of respondents saying stocks or bitcoin will be higher in 12 months
Net proportion of respondents saying stocks or bitcoin will be higher in 12 months

Crypto has also cemented its hold on 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 massive 46% of you answered crypto – up from 37% in September and 25% in March. 

Proportion of respondents saying crypto is the most-crowded trade
Proportion of respondents saying crypto is the most-crowded trade

What risks do Finimizers see on the horizon?

As quickly as it arrived, the China Evergrande crisis has dropped off your radars. After topping Finimizers’ list of biggest concerns in September, just one of you mentioned it this time even though it’s just defaulted on its debt. A testament to the success of China’s government in containing the fallout, I suppose.

Instead we’ve returned to the twin worries that have haunted you all year: Covid and inflation. After dropping down to number three on the list in September, Covid is back up to a close second as the Omicron variant sweeps the world. Anyone getting a weary sense of déjà vu?

Responses to “What’s the biggest risk for markets at the moment?”
Responses to “What’s the biggest risk for markets at the moment?”

What’s the opportunity here?

Professional investors mainly use these sentiment surveys as “contrarian” indicators. If people are panicking about a certain part of the market, it could – so the thinking goes – be due for a rally. And, conversely, it could be a sign of a market that’s due for a pullback if people are overly optimistic.

So Finimizers’ growing love for all things crypto – while perhaps not yet reaching truly euphoric levels, which traditionally comes before a fall – does suggest that bitcoin and its brethren may struggle to climb too much higher in the near term. And on the flipside, the growing pessimism about stocks suggests there may yet be room for the bull market to run further. 

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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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