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A Quiet Coup in the Marketplace

05/17/2013 5:36 pm EST


Kim Githler

Chair and CEO, MoneyShow

Regardless of whether they were asked about equities, real estate, or gold, the results showed that across the board, investors are buying once again, notes Chair and CEO Kim Githler, after unveiling the results of MoneyShow's latest investor sentiment survey. Individual investors are increasingly optimistic about the economic recovery and are adjusting their portfolios accordingly.

Las Vegas, NV-For the first time in over three years, investors at The MoneyShow are feeling bullish again, showing increased confidence in the financial markets.

When it comes to understanding economic trends and market performance, The MoneyShow community of investors has proven time and again to be one of the savviest groups of investors in the world. The overall optimism shown by the results of our most recent investor sentiment survey bodes well for the continuing recovery of the US equity markets.

Regardless of whether they were asked about equities, real estate, or gold, the results showed that across the board, MoneyShow investors are buying once again.

Of the 1,191 people who responded to our survey, a total of 57% responded that they believe the S&P 500 Index will climb higher by the end of 2013. Confidence is on the rise: 63% of respondents believe the recession is over and that GDP will grow at a modest pace, as opposed to a mere 6% who think the economy is headed for another recession.

Regarding inflation, 64% of investors expect the Consumer Price Index to rise along with GDP, while 32% believe the CPI will remain the same, and less than 4% believe deflation is the most likely scenario to occur this year.

Looking at more general economic indicators, investors believe the worst is over for the US economy. In particular, the real estate sector is increasingly being viewed more favorably. Of those surveyed, 54% believe that housing has already bottomed out; of those who think that the housing market has not reached bottom yet, 30% believe this will occur within the next year.

Possibly the most telling result of The MoneyShow Investor Sentiment Indicator is the strong movement away from stockpiling cash. Less than 20% of those surveyed indicate that more than half of their portfolios are in cash or cash equivalents, while 54% say they are now investing and trading more actively.

For those who would look at individual investors as a contrarian indicator, we note that our surveys show a solid and steady rise in investor conviction, not a jump in unrealistic expectations that would suggest "irrational exuberance." Indeed, only one in seven respondents believe that the S&P will increase by more than 10% this year. And few expect unemployment to decline much below 7%.

Additional survey results confirm that while investors are increasingly bullish, today's sentiment is far from "frothy." In fact, of the money being directed out of cash and into investments, less than 1/3 is currently being put into US large-cap companies, while only one in five respondents are buying "riskier" small- or mid-cap companies.

Interestingly, of all the asset classes gaining in popularity, gold is attracting perhaps the most pronounced interest. Of those surveyed, 48% said they would be purchasing gold or other precious metals before the year is out.

Though gold has fallen sharply this year, our survey respondents nevertheless view the metal as a hedge against the anticipated inflation associated with an economic recovery, as well as protection against currency devaluation.

The bottom line is that individual investors are increasingly optimistic about the economic recovery and are beginning to adjust their portfolios accordingly. There has been a quiet coup in the marketplace, and cash is no longer king. Instead, today's investors appear ready to restore the crown to gold, stocks, real estate, and other financial assets.

To see the full results from the MoneyShow Sentiment Indicator Survey, click here...

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