Individual investors are channeling their inner Mick Jones, former lead singer of The Clash, and th𒉰e 𓆏band’s 1981 hit, “Should I Stay or Should I Go,” as they face the dueling forces of a strong bull market amid fears that it may have run too far, too fast.

Still, with inflation receding and confidence in the Federal💧 Reserve’s monetary policies, investors are feeling the most optimistic about their portfolios as they have all year. More in🉐vestors are expecting higher returns for the U.S. stock market over the next six months, and fewer are expecting losses, according to Investopedia’s latest sentiment survey of our newsletter readers.

In addition, fewer investors are making “safer” choices with their investments and are leaning more into stocks, even though nearly half of those surveyed believe the U.S. stock market is overvalu﷽ed, and some sectors and stocks are in bubble territory.

Behind the recent enthusiasm among respondents is the belief that a recession is less likely, and that the Federal Reserve’s hawkish policies have actually worked to 澳洲幸运5开奖号码历史查询:lower inflation without causing the economy to grind to a halt. In fact, nearly half of respondents now say they approve of the way the Fed has handled monetary policy, which is an increase of 13 percentage points from early June.

While the fastest pace of interest rate increases in history has helped to cool inflation, it has also pushed more investors toward cash-related investments like 澳洲幸运5开奖号码历史查询:certificates of deposit (CDs). With 澳洲幸运5开奖号码历史查询:4% or higher yields on CDs, they have been a relative safe-haven for investors for the past year given all the uncertainty about the markets and the economy, and were the most popular choice among our respondents. That said, a steady bull market that began in October of 2022 has lured more investors back to stocks and ETFs, which have gained in popularity.

An Extra $10,000?

While CDs continue to be our readers’ top choice of where they have been putting their money lately, more of them would actually put extra money into stocks. If given an extra $10,000 to invest as they wish, 20% of respondents selected stocks, the highest percentage in a year, while 12% selected CDs. That has flipped from earlier in the year when CDs were their top choice for an unexpected w🍌indfall.

Biggest Concerns

Investors' list of worries has also changed over the past several months as inflation has dissipated and the threat of a recession has receded. Even the recent credit rating downgrade of U.S. government debt by Fitch failed to rattle investors. Instead, U.S.-China relations now tops the list of their concerns, followed by a potential recession, and Russia’s ongoing war with Ukraine. Persistently high interest rates are less of a concern than they’ve been all year, despite the fact that the Fed funds rate sits at a 22-year high.

FOMO

Our ♔survey showed readers are still a little wary of the sജtock market rally over the past few months. When asked about stock market performance so far this year, 48% responded that they are cautious because they think the market has come too far, too fast, while 31% said they are excited and think the rally has only just begun. Meanwhile, some investors have FOMO (or fear of missing out)—29% said they fear they’re being too cautious and might miss out on more returns.

Bubbles? 

The rapid rise in several sectors and themes in the stock market since the beginning of the year has caused some 澳洲幸运5开奖号码历史查询:frothiness, according to survey respondents. Fꦚorty꧟-four percent say the U.S. stock market is overvalued, while only 21% believe it is correctly valued. 

Inside the stock market, 澳洲幸运5开奖号码历史查询:A.I. related stocks top the list of bubbles with 61% of re🎀spondents, while 54% think mega-cap tech stocks are overvalued. While investors may think it's frothy in those areas, it hasn’t stopped most of them from continuing to lean into their favorite stocks in those sectors. Apple, Microsoft, Alphabet, Amazon and Nvidia continue to top the list of our readers’ favorite stocks, just as they have since we began our bi-monthly survey in 2020.

In fact, we asked our readers if the🎐y could buy and hold just one stock for the next decade, which would they choose—their choices should not come as a surprise.

Methodology

This survey was fielded online to Investopedia readers 18+ living in the U.S. from July 28 to August 2, 2023. Readers must currently hold & manage investments to qualify. Participation in the survey is entirely voluntary; sample composition reflects U.S. 18+ reader base.