56% Of Millionaire Investors See 2023 With Most Pessimistic Outlook Since 2008 Crash, Says Survey

At a time when most of the major stock market indices are bleeding amid global recession fears, rising interest rates, geopolitical tensions, and inflation concerns, the majority of millionaire investors are pessimistic about 2023 as well.

They are expecting double-digit declines in stocks next year, reflecting their most bearish outlook since the 2008 financial crisis and market crash, according to a survey.

Most Pessimistic Sentiment Since 2008 Crash

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Also Read: Analysts' Prediction Indian Stock Market For 2023

56% of millionaire investors surveyed expect the S&P 500 to decline by 10% in 2023. Nearly a third expect declines of more than 15%. The CNBC Millionaire Survey was conducted in November among investors with $1 million or more in investable assets.

They also expect falling equities to reduce their wealth. When asked about the biggest risk to their personal wealth over the next year, the largest number (28%) mentioned the stock market.

The last time millionaire investors were this pessimistic was during the financial crisis and Great Recession, around 2008, when the stock market crashed.

"This is the most pessimistic we¡¯ve seen this group since the financial crisis in 2008 and 2009," said George Walper, president of Spectrem Group, which conducted the survey with CNBC.

Inflation, rising rates, and the potential for recession are all weighing on the minds of wealthy investors, Walper said, as per the report. And while markets have already fallen this year, with the S&P 500 down about 18%, wealthy investors are forecasting even more pain ahead next year.

The bleak outlook could also put additional pressure on markets since millionaire investors own more than 85% of individually held stocks. More than a third of millionaires expect their overall investment returns (which include bonds and other asset classes along with stocks) to be negative next year. Most are expecting returns of less than 4%, which is low given that short-term Treasurys are now yielding over 4%.

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Many millionaires are holding cash and planning to stay on the sidelines, at least for the foreseeable future. Nearly half (46%) of millionaire investors have more cash in their portfolios than last year, with 17% holding "a lot more."

Millionaires are also bearish about the economy, with 60% expecting it to be "weaker" or "much weaker" at the end of 2023.

Also Read: When & Why Do Investors Suffer Losses In Stock Market?

Millennial Millionaires Remain Optimistic

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81% of millennial millionaires expect their assets to be higher at the end of next year

There is a large optimism gap between younger and older millionaires. 81% of millennial millionaires expect their assets to be higher at the end of next year, with nearly half (46%) expecting their assets to be up 10% or more. By contrast, most (61%) baby boomer millionaires expect their assets to be lower or ¡°much lower¡± next year. More than half of millennial millionaires say the S&P 500 will be up 10% or more next year.

Walper said millennials have grown up in a financial world of low interest rates and rising asset prices, where market sell-offs have usually been followed by quick rebounds. Older generations, he said, may remember the high-inflation, rising-rate world of the 1970s and early 1980s, when the S&P drifted lower for more than a decade.

¡°The millennial millionaires have never lived through a true inflationary environment,¡± Walper said, as per the report. ¡°For their entire business life, they¡¯ve seen interest rates that were managed by the Fed. They¡¯ve never seen rate hikes this aggressive.¡±

Now it remains to be seen whose predictions come true in 2023, whether the older generation's pessimism turns true or the millennial generation's optimism comes out as the winner.

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