Investors continue to be predominately bullish or very bullish on market performance, according to the latest quarterly survey of independent investors from Sandy-based Ally Invest Advisors, a wholly owned subsidiary of Ally Invest Group Inc., the brokerage and wealth management arm of Ally Bank.
Bullish or very bullish sentiment rose from 55 percent in the previous quarter to 76 percent in the fourth quarter of 2017, suggesting that even with recent market highs, investors still see room at the top for continued growth. Further, investors remain largely positive about upcoming “FAANG” (Facebook, Amazon, Apple, Netflix, Google) earnings, with investors showing particular confidence in Amazon’s results exceeding street expectations.
The results of the in-house survey, conducted Jan. 4-9 by Ally Invest, are based on responses from 385-plus independent investors.
The quarterly survey showed 61 percent of investors have a bullish market outlook (vs. 49 percent last quarter) and 15 percent are very bullish (vs. 6 percent last quarter), with just 3 percent of investors reporting a bearish or very bearish view (down from 12 percent last quarter). Investors point to corporate earnings (71 percent of respondents) and accelerating growth (44 percent) as particular market drivers. However, investors continue to keep a close eye on potential market concerns, including somewhat lessened concerns about international unrest (42 percent this quarter vs. 54 percent last quarter), with concerns about slowing year-over-year growth and weakening of the U.S. dollar tied at 17 percent of respondents.
When asked, “What is your outlook for each of the ‘FAANG’ stocks for the fourth quarter?” the majority of investors believe again this quarter these companies will either meet or exceed street expectations, with bullish sentiment the strongest on Amazon and the weakest on Apple and Netflix.
When asked, “Which trade triggers are you watching most closely for each of the ‘FAANG’ stocks?” investors offered a range of responses, though ongoing annual revenue growth was among the top three triggers cited by all investors surveyed:
• Facebook: The social network’s advertising revenue was cited as the top investor response (19 percent), followed by year-over-year revenue growth (12 percent) and year-over-year earnings-per-share (EPS) growth and the number of active users/subscribers tied for third (11percent).
• Amazon: Investors likewise pointed to year-over-year revenue growth as the top trade trigger (28 percent), followed by year-over-year EPS growth (12 percent) and gross margins (7 percent).
• Apple: Apple’s enduring reputation for innovative consumer products continues to be its calling card, with investors pointing to new product launch(es) as a top trade trigger (18 percent), followed by product sales by category (16 percent) and year-over-year revenue growth (12 percent).
• Netflix: The number of active users/subscribers was Netflix’s top trade trigger (29 percent), followed by year-over-year revenue growth (10 percent) and year-over-year EPS growth (9 percent).
• Google: Ad revenue was the top Google trade trigger (18 percent) followed closely by year-over-year revenue growth (17 percent) and with year-over-year EPS growth (9 percent).