The average Vanguard investor anticipates a one-year stock market return of less than 1%, the lowest expectation we have seen since we started measuring investor sentiment in early 2017. Just one year ago, that expectation was close to 6.5%. The one-year return of the Standard & Poor’s 500 Index, a proxy for U.S. stock market performance, was –10.62% during that period (the 12 months ending June 30, 2022).
Even so, a long-term perspective matters. “Only a small fraction of Vanguard’s nine million investors initiated trades in response to recent market volatility,” said Xiao Xu, a Vanguard investment strategy analyst. “That’s a result that’s consistent with our long-standing findings.” So far this year, just 14.3% of households with self-directed accounts have traded; among those, more than half launched just one trade. Even more telling: Most trading households moved money into equities rather than fixed income. When taken together, these results point toward an expectation for a steadier state over the longer term among Vanguard investors.