Over 40% of Investors’ Market Outlook Influenced by Upcoming Election

In this week’s Sentiment Survey special question, we asked AAII members which factors are most influencing their six-month outlook for stocks. Note that some members name more than one factor.

We received over 100 responses, of which 41% of respondents say that the uncertainty surrounding the outcome of the upcoming election is the most influential factor on their market outlook. This compares to 31% of respondents who say that the country’s ability to manage the coronavirus pandemic and the ability to find a vaccine in the near future are the most influential factors.

About 11% of respondents say that the unemployment rate in the U.S. is the most influential factor. In addition, 10% of respondents say that the Federal Reserve’s policies, low interest rates and tax law changes are the most influential factors. Lastly, about 7% of respondents say that the overly optimistic market valuations and the likelihood that a bubble burst will occur are the most influential factors on their six-month outlook.

Here is a sampling of the responses:

• “Markets are beginning to look at the elections, and the uncertainty―if not the outcome―does not bode well for the near future.”
• “Politics and the likelihood of political change—either further to the right or further to the middle—both affect those who buy and sell. I suspect the stock market will do well although individual companies may suffer severely.”
• “The stock market will ignore economic reality in the hopes that a coronavirus vaccine will be available and solve the pandemic quickly.”
• “I feel there is too much uncertainty to have any firm conviction plus, minus or neutral. In my mind, all of that uncertainty derives from the upcoming general election.”

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