Key points to remember
- 59% of readers are most concerned about the state of the nation
- 23% think the S&P 500 will fall in 2021
- 26% plan to make their portfolios riskier in 2021
- 16% choose Tesla as the stock they most want to own
Last week’s violence at the nation’s Capitol, the results of the senatorial races in Georgia and the certification of the presidential election have all combined to create a cloud of worry over the heads of investors, according to the results of our latest reader survey. Nearly 60% of our newsletter readers said the “state of the nation” is their biggest concern, far exceeding their health or the economy on their list of concerns.
That said, our readers are maintaining their slight uptrend and few plan to make big adjustments to their portfolios in 2021, according to the survey conducted Jan. 8-12. Their risk profiles remained relatively consistent throughout 2020 as they leaned into large-cap US stocks, particularly in the technology and healthcare sectors. These choices played out well in 2020 when the biggest risks were the resurgence of the virus and the uncertainty around the US presidential election. Investors were smart to worry about both, but smarter to leave their wallets alone as the stock market hit one record high after another.
Hope for future returns
Compared to our December reader survey, investor expectations for 2021 stock returns have cooled somewhat. The continued spread of COVID-19 and its new variants could be the main reason for their hesitation, with 28% choosing this as the biggest market risk in 2021 over another black swan event (14%) or more social unrest (11%). While nearly 17% of readers still expect meaningful returns in 2021, there has been an increase among those expecting a stock market pullback from our December survey. Additionally, 23% of our readers now think the S&P 500 will fall 0% to 10% or more in 2021, compared to just 9% of our readers who were so pessimistic last month.
US large-cap stocks still in favor
While expectations for big gains may be muted, our readers continue to favor large-cap US stocks as the asset of choice for 2021, particularly in the tech, pharmaceuticals and healthcare sectors. This combination has served them well in 2020, but there is growing interest in small caps and emerging markets, which outperformed most sectors at the start of 2021.
Bitcoin is also becoming more interesting to our readers who couldn’t escape the mania surrounding cryptocurrencies as 2020 looked to 2021. Namely, search interest for Bitcoin and other tokens on Investopedia has surged. skyrocketed over the past month, reaching levels we haven’t seen since 2017.
One stock to rule them all
We asked our readers, who are between the ages of 18 and 80, but who are mostly between the ages of 40 and 75 and actively investing, which stock they would own if they could only own one. The results were not very surprising. Tesla (TSLA) topped the list with 16% of our readers choosing the electric vehicle maker, which saw its share jump 700% in 2020. Apple (AAPL) was close behind, with 14% of our readers who chose the automaker, and Amazon (AMZN) was third, with 9% of readers picking the e-commerce giant as their top pick.