Millionaire investors haven’t been this bearish since 2008

Most millionaire investors agree stocks will lose big in 2023, CNBC survey shows

Millionaire investors are betting on a double-digit drop in stocks next year, reflecting their most bearish outlook since 2008, according to CNBC’s Millionaire Survey.

56% of millionaire investors surveyed expect the S&P 500 to fall 10% in 2023. Nearly a third expect a drop of more than 15%. The survey was conducted among investors with investable assets of $1 million or more.

They also assume that falling stocks will reduce their wealth. When asked about the biggest risk to their personal wealth in the coming year, the biggest number (28%) said it was the stock market.

The last time millionaire investors were gloomier like this was during the financial crisis and the Great Recession more than a decade ago.

“This is the most pessimistic thing we’ve seen for this group since the 2008 and 2009 financial crisis,” said George Walper, president of Spectrem Group, which conducted the survey with CNBC.

Walper said inflation, rising interest rates and the risk of a recession are weighing on the minds of wealthy investors. And while the market has fallen this year, with S&P 500 down around 18%, wealthy investors are forecasting even more difficulty next year.

The bleak outlook could also put additional pressure on the market, as millionaire investors own more than 85% of stocks held by individuals. More than a third of millionaires expect their overall return on investment (which includes bonds and other asset classes, along with stocks) to be negative next year. Most expect returns of less than 4%, which is a low given that short-term Treasuries are currently yielding more than 4%.

Many millionaires are holding on to cash and plan to stay out, at least for the foreseeable future. Nearly half (46%) of millionaire investors have more cash in their portfolio than they did last year, with 17% holding “a lot”.

Millionaires are also concerned about the economy, with 60% predicting the economy will be “weaker” or “much weaker” by the end of 2023.

However, there is a big optimism gap between younger and older millionaires. 81% of millennials expect their wealth to be higher by the end of next year, with nearly half (46%) expecting their wealth to grow by 10% or more. In contrast, most (61%) of baby boomer millionaires expect their wealth to be lower or “much lower” next year. More than half of millennial millionaires say the S&P 500 will grow 10% or more next year.

Walper said millennials grew up in a financial world with low interest rates and soaring asset prices, where a market sell-off is often followed by a quick recovery. Older generations, he said, may remember the high-inflation, rate-rising world of the 1970s and early 1980s, when the S&P fell lower for more than a decade.

“Millennium millionaires have never lived in a truly inflationary environment,” says Walper. “In their entire business life, they’ve seen Fed-managed rates. They’ve never seen rate hikes like this.”

Millionaires’ pessimism is also affecting their views of financial advisors. The majority said they consulted “very little” or “not at all” with their financial advisors on how to position for inflation. Walper said approval levels for financial advisors have “never fallen so quickly, at any level of wealth.”

“They feel that their counselors are not communicating or preparing them how to deal with it,” says Walper. “They don’t talk to them about what all this means for their financial future.”

The CNBC Millionaire Survey was conducted online in November. A total of 761 respondents, representing the financial decision makers in their households, were eligible to participate in the survey. The survey is conducted twice a year, in the spring and fall.


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