I just ate six cookies in a lunch meeting.
They were perfect: still warm from the oven with the chocolate chips still melted. I'm not really sure how it went from one cookie to six, but I knew all along it was a bad idea.
To make it worse, I had told everyone I was giving up sugar to try and get into shape before spring. Sometimes my behavior just doesn't match my goals or attitudes.
We just found a similar disconnect for investors in the latest MFS Investment Sentiment Insight survey. When we asked about their asset allocation and their opinions about various asset classes, their attitudes and behaviors didn't match. Cash had the lowest positive ratings of any asset class we asked about and also the highest negative ratings1.
But investors had almost a quarter of their portfolio in cash. On the other hand, US equity had the highest positives and lowest negatives, but investors had only 39% of their portfolios allocated to US equity2. They may know that this isn't the right choice: Less than half were very confident they had the right allocation.
Investors seem to be reacting emotionally to what's happening in the news cycle rather than focusing on how to meet their long term goals. Lengthening their time horizons will help them match their goals and investments.
111% of investors rated bank accounts (cash) as a very good or excellent place to invest; 67% rated bank accounts as a fair or poor place to invest.
237% of investors rated US equities as an excellent or very good place to invest; 20% rated US equities as a fair or poor place to invest.
- Read more about the latest results from the Investing Sentiment Insights survey. Find out about Millennial investors, overall sentiment and perceptions of investment risk in active and passive investments.
- Check out the blog post from Michael Roberge, MFS President and Chief Investment Officer, regarding the importance of a long-term time horizon.
- View "Lengthening the Time Horizon," a short video in which Mike discusses the benefits of a long-term approach to investing.