America’s wealthy say Fed-induced stock rally has plenty of life left

He thinks what we are seeing from millionaire investors is a renewed belief that the stock market typical of the decade-long expansion during the Fed’s post-crisis dovish policy has a little room left to run. “The expansion is not over,” he said.

J.P. Morgan CEO Jamie Dimon said last week on the Wall Street bank’s earnings call that the U.S. economic expansion “could go on for years.”

The percentage of wealthy investors who described the current business cycle as being in the peak phase increased from 39% in Q1 to 47% in Q2, while the percentage of investors who described current conditions as being the expansion phase rose from 27% to 36%.

“We know that in such an environment, which persisted for a good portion of the last decade, those modest levels of growth, if they persist, are accommodative for risk assets, including stocks,” Loewengart said. “We’re at the sweet spot of the bell curve of data in having more modest — one could even say more reasonable — expectations for returns.”

He added that expectations for a trade deal between the U.S. and China are also probably helping to make investors more confident. The survey found that the wealthy still view the trade war as the biggest risk to their portfolio, with 64% citing it, down slightly from 71% in Q1.

The E-Trade official also noted that these millionaire investors — who likely have many years of experience through market ups and downs — did not indicate they had major changes planned for their overall portfolio allocations, even as they become more bullish on stocks. Forty-nine percent said they plan to make no changes this quarter.

“These are measured responses. I call it a business owner approach to markets, business owner approach to investments,” Loewengart said. “Long-term expectations for domestic stocks in particular are single digit, mid-single digit returns at higher end. … These investors are still positive, the vast majority think stocks should go up, but more modestly in terms of overall gains.”

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