More Than Three out of Five Investors Have Positive Market Expectations for 2020

This week’s Sentiment Survey special question asked AAII members how big of a gain or loss the S&P 500 will realize in 2020. More than three out of five respondents (62%) expect another positive year for the market. Nearly 37% of respondents expect the large-cap index to rise by 6% to 10%, with many of these AAII members expecting a gain of approximately 10%. An additional 17% of respondents think the S&P 500 could experience a more modest of increase of between 1% to 5%, with a 5% gain frequently predicted. The most optimistic forecast we received called for a gain of 32%.

Almost 15% of respondents expect the S&P 500 to fall in value this year. The majority of these individual investors (9% of all respondents) anticipate a single-digit decrease, with most predicting a decline of between 1% and 5%. A double-digit decrease was forecast by 6% of all respondents, with the most bearish prediction calling for a drop of 40%. This member anticipates a substantial drop in the prices of the so-called FANG stocks [Facebook Inc. (FB), Amazon.com Inc. (AMZN), Netflix Inc. (NFLX) and Google (Alphabet Inc.: GOOGL)].

Here is a sampling of the responses:

• “+10%; President Trump will continue to pump the economy to get reelected.”
• “4%-5% down due to politics and international weakness.”
• “5% growth. The market will continue to fluctuate, but fundamentals will remain strong.”
• “A gain in the first half; a pullback in the second. The S&P 500 will end about where it started, perhaps a few percentage points lower.”
• “8% gain, assuming President Trump gets reelected. If he loses the election, the market will drop by 10% to 15%.”

During the weekly survey period ended on December 25, we asked AAII members how the new trade agreement between the U.S. and China is impacting their outlook for the stock market. Responses were mixed. Two out of five (40%) respondents said they are more optimistic about the stock market and believe that the deal will help stabilize the market in 2020. On the other hand, 34% of respondents stated that the new deal has no effect on their outlook. Many in this group think the market has already priced the news in. Other respondents from this survey said their outlook is more uncertain than before (17%), and 9% said they are more pessimistic because of uncertainties that remain in the trade dispute.

Here is a sampling of the responses: 

• “Positive initially; however, if the big items (i.e., intellectual property) don’t get sorted out soon, the impact will have less significance.”
• “Bullish in the short term, insufficient for the long term.”
• “It is a positive development. It impacts and reinforces positive sentiment, though I doubt it will materially add to the profitability of most U.S. companies.”
• “Not much. After all this time and talking, it seems like the trade deal may be all priced in. Longer-term though, a good deal will surely be positive.”

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