The Spectrem Millionaire Investor Confidence Index (SMICI) has steadily climbed to 7. While this is neutral territory for investors, it is a significant comeback from the unprecedented lows posted in the wake of the economic collapse.
On 8 September 2008, the government took control of Fannie Mae and Freddie Mac, which were no longer able to cover their sub-prime mortgage losses. A week later, financial services firm Lehman Brothers filed for Chapter 11 bankruptcy protection. The Dow Jones recorded the largest single day points drop (more than 500) since 12 September 2001.
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In September of 2008, the SMICI, a monthly measure of the investment confidence and outlook of households with more than US$1 million in investables, dropped 9 points to -18. In November, the Millionaire mindset dropped to its low ebb of -39.
On the investment front, Millionaires were more invested in the market than Non-Millionaires. When asked how they would be investing in the short term, Millionaire interest in Stocks held steady through October, while Non-Millionaires expressed their intention to back away.
For both groups of investors, investment in safer Cash investments posted the highest month-over-month gains in September 2008. But Millionaires were less likely than Non-Millionaires to say they would retreat to the sidelines and wait out the volatile developments. ‘Not Invest’ actually dropped in September among Millionaire investors, but edged upward 1.1 points among Non-Millionaires.
In Spectrem’s most recent monthly survey of investment preferences, ‘Not Invest’ was actually at a higher reading (34.1 points) in August than in September 2008 (33 points). But intentions to invest in Stocks rebounded strongly, from 25.2 points five years ago to 36.1. And whereas intention to invest in Cash was at 35.7 in September 2008, it was at 27 last month.
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By GlobalDataIn reflecting on lessons learned from the economic collapse, Millionaires are not likely to have financial regrets, according to a 2013 wealth level study conducted by Spectrem’s Millionaire Corner. Almost one-third (31%) said ‘None of the above’ when asked to list their financial regrets prior to the collapse.
23% said they wished they had saved more, while 20% wished they had invested more conservatively. 17% said they wish they had done more independent financial research.
