Investor Sentiment Shows 4Q Rise

After remaining level for the previous year, investors expressed rosier outlooks in the fourth quarter, according to a survey by John Hancock Financial.

The John Hancock Investor Sentiment Index, a quarterly measure of investors’ views on a range of investment choices, life goals, and economic outlook, reflects the percentage of investors who say they believe it is a “good” or “very good” time to invest, versus those who feel the opposite. Investors’ positive feelings about stocks helped drive the year-end index score to +26, matching its previous record high in the second quarter of 2013.

Six in ten investors said they are confident about investing in stocks, while a similar share expressed optimism about investing in balanced mutual funds. Nearly 30% believe that blue chip stocks will be the market’s top performers over the next six months, a jump in expectation from the third quarter, when 22% thought this would be the case. Technology, health care and energy companies offer the best investment opportunities in the next six months, investors say.

Saving for retirement remains a key priority. Eight in ten said that now is a good time to put money away in 401(k) plans or individual retirement accounts (IRAs). About two in five are positive about investing in target-risk funds and target-date funds. Half of investors have positive views of contributing to 529 college savings plans.

It’s not just investing that invokes positive outlooks from investors, according to Megan Greene, chief economist at John Hancock Asset Management. About a third of those surveyed said they feel it is a good time to start a business, compared with 21% in the first quarter. About a third (31%) said it is a good time to change jobs, a significant uptick from the 19% who expressed this in the first quarter.

Investor respondents were optimistic about their own personal financial situations as well, Greene said. “Half say they are better off than they were two years ago, and half believe their situation will improve over the next two years,” she said.

A quarter of investors cite their savings and investment portfolios as the main reason they believe their financial situation will be better in the future. Eighteen percent chalked their optimism up to having paid down debt. Of the 8% of investors who predict their financial situation will be worse in two years, one-third cited government and politics as the culprit.

It’s not all clear skies ahead, though, investors say. The cost of health care is of major concern to 54% of those surveyed. Four in ten are very concerned about market consequences of unrest in the Middle East, a share that has increased significantly from last year (from 29% in the same period of 2013). Worry over oil and gasoline prices plunged, with only one in six expressing great concern, compared with 26% in the previous quarter and 33% in the second quarter of 2014.

John Hancock’s Investor Sentiment Survey is a quarterly poll of affluent investors. The survey measures investors’ feelings about the current economic climate and their evaluations of what represents a good or bad investment, given the current environment. The poll also asks consumers about their confidence in reaching key financial goals and their attitudes toward specific financial products and services.

The online survey was conducted by independent research firm Greenwald & Associates. A total of 1,139 investors were surveyed between November 10 and November 21.  To qualify, respondents were required to participate at least to some extent in their household's financial decision-making process, have a household income of at least $75,000, and assets of $100,000 or more.