The Rich Trust Wall Street More Than Capitol Hill
While many Americans quickly moved on from October’s partial government shutdown and near-default, it seems the nation’s high net worth individuals are less ready to forget about it.
The wealth management arm of Pittsburgh-based PNC Financial Services annually surveys those with at least a half million dollars to invest and incomes of more than $150,000. The latest survey was completed a few weeks ago and it found that 76 percent of those responding feel “governing by crisis” is not sustainable and 48 percent are less optimistic about the economy than they were before the shutdown.
“This was a big deal in Washington for the affluent and the result shows they have definitely lost a lot of confidence in Washington,” said Mike Maglio, PNC Wealth Management Market Investment Director.
Despite their pessimism, the more rich among us are still ready to put their money in the equity markets.
“There seems to be this disconnect between optimism about the economy, growth in GDP, versus how the market is doing. GDP growth, most recent numbers, is about 1.7 percent but the market is up about 23 percent this year,” Maglio said.
52 percent of those surveyed say they will keep their investment in the equity markets stable and another 39 percent say they will put more money into stocks. More specifically they say the Technology (59%), Healthcare (50%) and Energy (42%) sectors hold the best chance for gains.
What does that mean for the rest of us?
“Reacting to that, I think investors ought to be exposed to equities,” said Maglio who warns that every one needs to review their personal financial situation before making any changes. “But if we look at the result of this survey, the point is you want to have some exposure to stocks because of the others in the market.
Maglio thinks more money will be coming “off the sidelines” or out of other investment tools and into the markets.
But Maglio is still a bit worried about the lack of optimism among the nation’s high net worth individuals.
“We were gaining steam on optimism before the shut down, before the debt crisis, and then optimism kind of rolled over,” Maglio said.