Do Investors Fear Another Imminent Market Crash?
The disastrous aftershocks of the financial crisis are still being felt throughout Main Street. Despite years of unprecedented intervention from central banks, the nation is witnessing the weakest economic recovery in history. Some investors have a renewed sense of optimism as stocks reach new record highs, but many Americans are still wary of another market crash.
In the first quarter, the Wells Fargo/Gallup Investor and Retirement Optimism Index jumped 12 points to +37, compared to +25 in November. Before the government shutdown drama in Washington, D.C., filled headlines, the index reached +43 last May. During the depths of the financial meltdown, the index plunged to -64. However, the recent rebound is due almost entirely to a rise in optimism among retired investors, who posted a 35-point surge in confidence from last November.
“It is both interesting and encouraging to see that retirees are more optimistic,” said Joe Ready, director of the Wells Fargo Institutional Retirement and Trust, in a press release. “Dating back to May of 2012, retirees have responded to this poll every quarter with much more pessimism about their situation than have the non-retired — this is a real shift, and most likely correlates to the combination of a stronger stock market and the prospect of higher interest rates in the future.”