Asset Allocation for Half of Investors Unaffected by Economic Data

Last month’s Asset Allocation Survey special question asked AAII members how the prevailing economic data is affecting their asset allocation decisions.

Almost half of all respondents (49%) say that the data is not affecting their asset allocation decisions. Reasons given as to why include a long-term investing approach, being well diversified and strictly following specific investment plans. This compares to 27% of respondents who say that their asset allocation decisions are minimally affected by the prevailing economic data. AAII members in this group say that economic data may only lead to small percentage shifts from equities to either cash or bonds.  

About 17% of respondents say that the prevailing economic data is heavily affecting their asset allocation decisions. Many of these individuals have sold their positions and are now heavily allocated in cash, mainly due to uncertainties with both the presidential election and the coronavirus pandemic.

Here is a sampling of the responses:

• “I have a large portfolio, over 150 stocks. Ninety-five percent of that portfolio does not change. I only use 5% as my trading stocks. My trades are influenced by my perceptions of how the coronavirus battle is going.” 
• “I have a tendency to be close to all in or all out. I am concerned about the Senate. Also, the probable new president.” 
• “I’m holding a good bit of cash as a hedge against uncertainty in the market. Dividend-paying stocks and bond funds remain constant for income.”
• “No effect. I set long-term allocation strategies and have stuck to them.” 
• “Very much; when the data gets worrisome, it is time to sell much of the high beta stocks, cut back on all growth stocks and probably buy some put options, too.”