U.S. millionaires are betting on a strong stock market next year, and many expect double-digit gains, according to the CNBC Millionaire Survey.
70% of millionaires expect the S&P 500 to rise by at least 5% next year, according to a survey of households with invertible assets of at least $ 1 million. Nearly a third of respondents expect earnings of at least 10% by 2021, according to the survey.
The S&P 500 is approaching the last weeks of 2020 with an increase of almost 14%.
Although market levels are near or record highs, most millionaires plan to maintain or add their holdings next year, according to the survey. Only 9% plan to reduce ownership of the shares. This bullish in the face of the coveted pandemic and economic uncertainty could be a strong tailwind for the market, as millionaires own more than 85% of individually owned shares.
“I expected to see more of them making plans to exit the market at these levels,” said George Walper, president of Spectrem Group, a research and consulting firm. “They have clearly adjusted to volatility.”
Half of the millionaires surveyed predict that their personal wealth will increase next year, while another 40% say they expect it to stay the same.
Millionaire views on the biggest financial risks next year depend more on political party affiliations than on wealth levels. Republican millionaires cited taxes as the biggest risk to their wealth in 2021, while Democratic millionaires cited the virus as the biggest risk.
Less than a third of millionaires say the economy will be weaker next year and most say interest rates will remain the same, which will also help stocks. Its bright outlook is another sign of a K-shaped recovery, where middle and low-income winners and small businesses continue to have problems while higher-income workers and investors continue to see improvements.
Shares are the preferred investment category for millionaires next year, with 44% expected to add shares. When asked which market sectors are expected to add more money in 2021, technology ranks first, followed by healthcare and financial care.
“Given everything that’s going on around us, they’re optimistic,” Walper said. “It’s the vaccine and the hope of a reopening.”
Spectrem Group conducted the survey on CNBC. In November, it surveyed 750 participants with reversible assets of $ 1 million or more.