The latest AAII small investors allocation survey showed a continued move into bonds. Small investors are clearly hesitant to embrace the equity markets and continue to seek income in the safeness of bonds. The latest survey showed a 55% equity allocation (60% historical average), 25% bond allocation (15% historical average), and 20% cash (25% historical average.
Charles Rotblut of AAII elaborated on the results:
This month’s special question asked AAII Members what factors influenced their decision to make or not make a recent change to their allocations. The responses centered on a few key themes. Some respondents cited uncertainty about the economy, the upcoming election and fiscal policy as complicating the outlook for stocks. Several are looking for a catalyst from the stock market, either an upside breakout or a near-term pullback that will create a more attractive buying opportunity. Others said they were comfortable with their allocations and saw no reasons to change.
Here is a sampling of the responses:
- “Given the uncertainty in the economy and lack of leadership in Washington, there is no clear direction to take.”
- “No particular changes. I have absolutely no conviction of the stock market’s direction. Bonds are overpriced.”
- “There exists a tight trading range, as we wait for a jobs catalyst and election clarity. I expect to tilt towards equities as we approach November.”
- “Putting new money into cash and taking a ‘wait and see’ position before starting to dollar cost average my way back into stocks and ETFs.”
- “I made no changes because allocations are within my parameters and dividend income is meeting my cash flow requirements.”
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.
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