Only 14% of Americans think the stock market will go up next year, in sharp contrast to the generally bullish tone of most people in the financial world, the Associated Press reports. The AP-GfK poll also found that 40% of Americans expect the market to stabilize at its current level through the end of 2014, 39% expect it to go down but not crash, and 5% expect a crash.
Only 73% of investors in the poll say the markets have improved this year
Of course most of the general public, and most people in this survey, aren’t actively involved in the stock market, reflected by the fact that only about half of the respondents were aware that US equities have had strong performance in 2013, compared to 73% of investors who said the market had improved. Considering the S&P 500 is up almost 30% so far this year, the NASDAQ is up 36%, and the Dow is up 26%, it would be interesting to know what the other 27% of investors meant when they said the market hadn’t improved, but the poll doesn’t tell us. Concerns about whether the past year’s gains are sustainable seems likely.
The general consensus among analysts is that US equities will continue to grow, but not as quickly as in 2013 since there isn’t much room for further multiple re-ratings. Bears are worried that tapering will have a bigger impact than consensus is accounting for, and that even if Federal Reserve chairperson nominee Janet Yellen then pulls back, it could be enough to shake people’s confidence, but this is a minority view.
Public’s perception of stock market
The AP argues that the general public’s perception of stock market performance could be skewed by their immediate situation, and their answers may have been proxies for how they feel about the economic recovery in general. Fortunately for people taking long positions, the negativity shouldn’t directly affect prices since it’s only the sentiment of people actually buying and selling stocks that matter. But the pessimism does matter indirectly; as long as the rest of the country is nervous about the fate of the economy, it will be hard to find enough demand for companies to increase their earnings.