Partisan strife tops actual warfare as the biggest hindrance to the U.S. investment climate, according to a Gallup poll. Advisors should be aware there’s an overwhelming sense among clients that the stock market would be better off were it not for bickering politicians who contribute to government gridlock.
The Wells Fargo/Gallup Investor and Retirement Optimism Index gathered responses in August from 1,011 investors with at least $10,000 spread across stocks, bonds, mutual funds and retirement accounts. It’s worth remembering that the poll was conducted before ISIS and ebola came to dominate the headlines.
A whopping 88% of respondents said “political discord in Washington” was hurting investor sentiment. That ranks above the 82% who said conflict in the Middle East, which then centered on the exchange of fire between Israelis and Palestinians, and the 74% who mentioned the conflict in Ukraine, as major problems for U.S. investors.
Economic issues filled out the five biggest downers for investors. The unemployment level was a top worry for 80% of respondents, while the gap between the wealthy and the middle class vexed 78% of them. Investors with more than $100,000 in assets were somewhat less concerned about income inequality than were investors with less.
Domestic stocks have been on a wild ride since August, with the S&P 500 dropping 3.7% between Sept. 2 and Oct. 9. Since midterm congressional elections are less than a month away, politicians may begin feeling some of that pain if the market doesn’t pick up by then. Either way, now’s a good time for advisors to remind clients not to vent their political frustrations by fiddling with their investment portfolios.