Recent research highlights a resurgence of confidence among retail investors in the US stock market following a period of decline over two quarters. A survey conducted involving 10,000 retail investors from 12 different countries revealed that 38% now deem the US market as having the best potential for long-term returns—a 12% increase compared to the earlier quarter. This uptick signifies a reversal of the downward trend seen in the previous quarters, where confidence had dropped by 9% and 17%.
As a reflection of this renewed interest, 43% of investors are currently exposed to the US market, which is an increase of 8% from the last quarter and represents the highest level of engagement since the survey’s inception in early 2023. This shift illustrates a growing sentiment that, despite diversifying investments globally, the US market remains pivotal for investors.
In contrast, there is a noticeable caution among investors towards the so-called “Magnificent 7” tech stocks, namely Amazon, Apple, Microsoft, Meta, Tesla, Nvidia, and Alphabet. Only 13% believe these stocks will significantly outperform the market by 2025, with an additional 33% anticipating a slight outperformance. The survey notes an increase in the number of investors planning to reduce their exposure to these tech giants, particularly Tesla, which registered a notable 6 percentage point rise in those opting out of investment or planning to withdraw.
Attention is also directed towards the future of the US dollar, with half of the investors indicating plans to adjust their portfolios in light of potential long-term weakness. Despite this apprehension, a robust 83% of respondents are confident that the dollar will maintain its status as the global reserve currency over the next decade, with only 7% anticipating a loss of its position, as they consider alternatives like the Chinese yuan, euro, gold, and central bank digital currencies.
The survey did show that retail investors are navigating a balance between diversification and an understanding that long-term growth is significantly tied to the US economy. As concerns about a global recession are diminishing, with 23% of participants identifying it as the primary risk to their portfolios—down from 26% in the previous quarter—attention is shifting. Inflation continues to be a major worry for 19% of participants, while concerns about domestic issues have escalated, with those viewing their local economy as the chief threat rising from 11% to 14%. Notably, 28% of investors in the US expressed heightened concerns about domestic economic risks.
In summary, the retail investment landscape is starting to show signs of optimism again in the US, fueled by a recognized resilience in the economy. Investor behavior is evolving, with a greater focus on exposure to American markets, coupled with a cautious stance on major tech stocks and an increasing awareness of domestic economic concerns amid waning fears of global recession risks.