SMALL INVESTORS CONTINUE TO MOVE INTO BONDS

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.”

Source: AAII