America’s richest are losing confidence in the stock market

The rich and famous want out of this volatile market.

America’s wealthiest people have lost investing confidence — and they may be right on the verge of a flight to the safety of CDs and other cash products as market losses mount, with a staggering $13 trillion estimated by ET Intelligence Group to have vanished in equities worldwide in 2018.

“In periods of uncertainty, the wealthy tend to be more concerned with asset protection rather than growth,” said Joseph Biondolillo, principal at financial planning firm Biond Financial. “They tend to be defensive-oriented, and willing to wait for the dust to settle and for all the facts to be in.”

Confidence among these bruised US multimillionaires and affluent investors in general has plunged to lows not seen since August 2013 — so much so that cash investing was the only category of asset class that climbed in popularity in December, according to the latest monthly Spectrem Investor Confidence indexes.

Spectrem conducted its surveys of US households with $1 million or more in investable assets, and others with more than $500,000 or more, in mid-December, when the Dow sank 300 to 400 points on consecutive days.

“Significant financial market declines in the first half of December, which have continued, are negatively affecting investor confidence,” said Spectrem President George H. Walper, Jr.
And there’s more to come, he added, from fears of a slowing global economy to rising interest rates.

Among the other stark facts contributing to this dark outlook: Global and domestic debt levels are at nosebleed highs (US corporate debt alone has climbed to a record of roughly 46 percent of GDP), and the impact of the Trump tax cuts is fading.

Even American magnate Warren Buffett, one of the globe’s richest individuals, did not escape this stock market rout.

By some calculations Buffett lost as much as $4 billion or more in one single day at year’s end from his huge position (via Berkshire Hathaway) in Apple stock.

Biondolillo says rich investors are now pulling up their stakes in securities.

But “although they do not like uncertainty,” he added, “the wealthy understand the importance of asset allocation and diversification” in order to weather the storm.