Millionaire buyers are betting on double-digit declines in shares subsequent yr, reflecting their most bearish outlook since 2008, in accordance with the CNBC Millionaire Survey.
Fifty-six % of millionaire buyers surveyed anticipate the S&P 500 to say no by 10% in 2023. Almost a 3rd anticipate declines of greater than 15%. The survey was carried out amongst buyers with $1 million or extra in investible belongings.
In addition they anticipate falling equities to scale back their wealth. When requested in regards to the largest threat to their private wealth over the following yr, the biggest quantity (28%) mentioned the inventory market.
The final time millionaire buyers had been this gloomy was through the monetary disaster and Nice Recession greater than a decade in the past.
“That is essentially the most pessimistic we have seen this group for the reason that monetary disaster in 2008 and 2009,” mentioned George Walper, president of Spectrem Group, which conducts the survey with CNBC.
Inflation, rising charges and the potential for recession are all weighing on the minds of rich buyers, Walper mentioned. And whereas markets have already fallen this yr, with the S&P 500 down about 18%, rich buyers are forecasting much more ache forward subsequent yr.
The grim outlook might additionally put extra stress on markets, since millionaire buyers personal greater than 85% of individually held shares. Greater than a 3rd of millionaires anticipate their total funding returns (which embody bonds and different asset courses, together with shares) to be unfavourable subsequent yr. Most expect returns of lower than 4%, which is low on condition that short-term Treasurys are actually yielding over 4%.
Many millionaires are holding money and planning to remain on the sidelines, at the least for the foreseeable future. Almost half (46%) of millionaire buyers have additional cash of their portfolio than final yr, with 17% holding “much more.”
Millionaires are additionally bearish in regards to the economic system, with 60% anticipating the economic system to be “weaker” or “a lot weaker” on the finish of 2023.
There’s a giant optimism hole, nevertheless, between youthful and older millionaires. Eighty-one % of millennial millionaires anticipate their belongings to be larger on the finish of subsequent yr, with almost half (46%) anticipating their belongings to be up 10% or extra. In contrast, most (61%) child boomer millionaires anticipate their belongings to be decrease or “a lot decrease” subsequent yr. Greater than half of millennial millionaires say the S&P 500 might be up 10% or extra subsequent yr.
Walper mentioned millennials have grown up in a monetary world of low rates of interest and rising asset costs, the place market sell-offs have normally been adopted by fast rebounds. Older generations, he mentioned, might bear in mind the high-inflation, rising-rate world of the Nineteen Seventies and early Eighties, when the S&P drifted decrease for greater than a decade.
“The millennial millionaires have by no means lived via a real inflationary atmosphere,” Walper mentioned. “For his or her total enterprise life, they’ve seen rates of interest that had been managed by the Fed. They’ve by no means seen fee hikes this aggressive.”
Millionaire pessimism can also be affecting their views of their monetary advisors. A majority say they’ve consulted “little or no” or “in no way” with their monetary advisors about find out how to place for inflation. Walper mentioned approval ranges for monetary advisors “have by no means dropped this a lot this shortly, in any respect wealth ranges.”
“They really feel that their advisors will not be speaking or making ready them for find out how to cope with it,” Walper mentioned. “They are not speaking to them about what all this implies for his or her monetary future.”
The CNBC Millionaire Survey was carried out on-line in November. A complete of 761 respondents, representing monetary decision-makers of their households, certified for the survey. The survey is carried out twice a yr, within the spring and within the fall.