Spectrem asked investors how they handled the last stock market crash and what they will do the next time the stock market tanks.
The stock market has bad days, and the worse days are remembered forever.
Monday, Aug. 24, 2015, was a bad day for the stock market in America. After a Friday drop of more than 500 points, the Dow Jones average dropped another 1,000 points by midday on that Monday, bouncing back up to a loss of more than 600 points by the end of trading.
Although the index had its third-highest point gain in history two days later, and moved back into the 16,000-point range, the “Gray Monday” prompted some concern among investors and advisors about what the future holds for the stock market.
In October, two months after the day-long drop, Spectrem Group's Investor Pulse asked more than 1,000 affluent investors whether the crash was worrisome to them. With that event several weeks in their rear view mirror at that time, only 34 percent of investors said “Yes”.
That means two-thirds of affluent investors were not shaken up by that stock market quake. So Spectrem asked “Why not?” in our monthly Investor Pulse survey.
Almost 40 percent took the thoughtful, introspective and popular viewpoint that “It was just a correction.” In fact, after the Dow Jones reached a record high of 18,312 on May 19, 2015, market analysts had predicted that a correction would take place, although that prediction took three months and the correction arrived very quickly.
Another 33 percent of investors said “I figured it would rebound quickly”, which it did, if “quickly” means in a manner of weeks.
Nine percent of investors said they are not heavily invested in the stock market, reducing the personal effect from that correction. Another 7 percent said they are protected against stock market fluctuations with other investments.
Among the investors for whom the bad August weekend was most worrisome were Corporate Executives (45 percent), and investors in the 41-60 age range (38 percent). It is perhaps interesting to note that 42 percent of investors who identify as Republicans were worried, while only 26 percent of investors who identify as Democrats had concerns.
Spectrem also asked how investors want their advisor to react when the stock market suffers its next big fall. More than 20 percent (22 percent) said they would not expect to hear from their advisor in that case. Instead, they would rather contact the advisor themselves if something concerning needs to be addressed.
But not all investors are that patient. Sixteen percent said they wanted to hear from their advisor within 24 hours, and 15 percent were willing to wait just 12 hours. Another 14 percent expected to get a call at some point in the near future, at least within a week of the event.
Investors with a net worth over $5 million were a bit more likely to want an immediate phone call or some advisor response. Corporate executives also reported a desire to hear from their professional advisor, with 20 percent wanting contact within 12 hours and 27 percent wanting contact within 24 hours.
Younger investors, those under the age of 40, also reported a desire to get a response from their advisor in case of a stock market correction. Twenty-two percent said they wanted a call within 12 hours and another 22 percent wanted to hear from their advisor within a 24-hour period.
Kent McDill is a staff writer for Millionaire Corner. McDill spent 30 years as a sports writer, working for United Press International and the Daily Herald of Arlington Heights, Ill. From 1988-1999, he covered the Chicago Bulls for the Daily Herald, traveling with them every day through the nine-month season. He also covered the Bulls for UPI from 1985-88, and currently covers the team for www.nba.com. He has written two books on the Bulls, including the new title “100 Things Bulls Fans Should Know And Do Before They Die’, published by Triumph Books. In August 2013, his new book “100 Things Bears Fans Should Know And Do Before They Die” gets published.
In 2008, he resigned from the Herald and became a freelance writer. The Herald hired him to write business features and speeches for the Daily Herald Business Conferences and Awards presentations.
McDill also writes a monthly parenting column for the Herald’s Suburban Parent magazine.
McDill is the father of four children, and an active fan of soccer, Jimmy Buffett and all things Disney.