Investor optimism has taken a nosedive in a recent poll by Wells Fargo/Gallup. But the long-term outlook remains upbeat.

The Wells Fargo/Gallup Investor and Retirement Optimism Index, which started with a baseline score of 100 in 1996, recently plunged from 138 to 4. That’s the largest-short-term drop since its inception.   

Wells Fargo said investor optimism was down on all economic components of the index, falling the most on the subjects of unemployment (34 points), followed by economic growth (26 points). Investors also soured on their outlook for reaching their 12-month investment targets. However, two-thirds of those polled remain optimistic about reaching their five-year investment goals.

The Investor and Retirement Optimism Index peaked at 152 in January 2000, at the height of the dot-com boom, and hit a low of negative 81 in February 2009.

The Gallup Panel online study, which was conducted in May and included 1,076 U.S. investors, aged 18 and older, also revealed that investors have not been swayed by the market downturn, as six in 10 continue to believe now is a good time to invest in the financial markets.

Just as they were last year, nearly seven in 10 investors are very confident (21%) or somewhat (48%) confident about investing in the stock market as a way to build wealth for retirement. Only 8% of investors saw the current stock market environment as a time to decrease their stock holdings to protect against further losses. Half said it’s a time to hold what they have and wait for the market to come back. And 35% saw it as a buying opportunity.

Tracie McMillion, head of global asset allocation strategy for Wells Fargo Investment Institute, noted that investors are displaying remarkable resilience at an unprecedented time. “Numerous trends in the poll confirm that investors view recent market disruption as episodic and temporary, not as a sign of systemic problems that will harm their investments in the long term or compel them to reallocate their assets,” she said in a statement.

The Covid-19 pandemic has undoubtedly affected investors’ finances, the poll found. About a third of all investors overall (32%) reported that the economic disruption caused by the coronavirus has had a negative impact on their day-to-day financial security. The poll found that 27% of nonretired investors had suffered a loss of income or pay, 15% had been furloughed or temporarily laid off, and 1% had been permanently let go.

One in four investors also reported that, as a result of the coronavirus, they had to take on more financial responsibility for family members. Sixteen percent reported providing greater financial assistance to an adult child, while 7% said they have assisted a parent, and another 7% said they had helped another relative.

Most investors (64%) said they spent less money because of the economic shutdown, and one-third said they were able to increase their savings. On the other hand, 21% said their savings decreased, while 46% said their savings ability was not affected.

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