Stimulus Debate Is Not Affecting Stock Outlook for 40% of Investors

In this week’s Sentiment Survey special question, we asked AAII members how the back-and-forth over new coronavirus-related stimulus has impacted their outlook for stocks. Two out of five respondents (40%) say that debates over coronavirus-related stimulus have had little to no impact on their outlook for stocks. This compares to 17% of respondents who say that the back-and-forth over new coronavirus-related stimulus has negatively impacted their outlook for stocks. About 10% of the respondents say this issue has only impacted their short-term outlook for stocks because they view the proposed stimulus as a temporary fix.

Additionally, 10% of respondents say that they expect to see market volatility until the election is over, after which they anticipate a market correction trending either up or down. About 7% of respondents say that their investment strategy has become more conservative due to uncertainties related to the fate of the proposed stimulus, and about 7% of respondents say that this issue could potentially create buying opportunities.

Here is a sampling of the responses:

• “No change in my outlook for stocks as I anticipated we would be going through ups and downs for the next two years and government handouts will not be enough to save some businesses or some industries over the long run. Until we have a safe and effective vaccine and have enough people immunized to stop the spread of the coronavirus, the economy will continue to just limp along.”
• “It affects short-term outlook only. The stimulus would be a life raft for some sectors in the short term but probably would not help long-term factors. Also, stimulus would have a short-term effect on consumer confidence and spending in the fourth quarter.”
• “I expect that the election results will signal a need for a stimulus in the short run and news of a vaccine will clear the path to a strong recovery.”
• “It has just hardened my belief that the market is reacting to politics, and not to the market itself. After the election, we’ll see where we really are.”
• “Lack of stimulus will hurt the economic recovery. Combine this with election results being delayed due to mail-in ballots, and possibly being contested, I see the stock market dropping in the near term. Recovery will be slow because of the lack of stimulus and increasing layoffs by state and local governments resulting from a significant decrease in tax receipts.”

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