Morgan Stanley Wealth Management Pulse Survey Reveals Investors Remain Optimistic for 2023 Despite Dim Near-Term Views

Investors still see opportunity for a soft landing and expect the economy to be in better shape by year end

Morgan Stanley Wealth Management announced results from its quarterly individual investor pulse survey:

“It’s been a challenging market environment as investors navigate through high inflation, geopolitical concerns, and recession fears”

• Bearish views remain. More than half (52%) of investors said they were bearish this quarter, down slightly (3%) from last quarter. And the majority (89%) of investors expect volatility to sustain or increase this quarter.
• Inflation and recession fears are top of mind. Even though more than half of investors (55%) believe inflation has peaked and will begin to slow, nearly two in three (64%) said they think it is the biggest risk when it comes to their portfolio. Recession risk (49%) and market volatility (44%) rounded out the top three.
• Though less believe we are in a recession. More than one in three (40%) of investors said they believe we are currently in the recession stage of the business cycle, 5 percentage points less than last quarter.
• And many believe in a “soft landing.” Over half (51%) of investors said the Fed will be able to steer the economy into a soft landing, and nearly two in three (64%) said the U.S. economy will be in better shape than it currently is by the end of this year.

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“It’s been a challenging market environment as investors navigate through high inflation, geopolitical concerns, and recession fears,” said Mike Loewengart, Head of Model Portfolio Construction for Morgan Stanley Portfolio Solutions. “While these challenges aren’t likely to disperse anytime soon, it’s important for investors, where appropriate, to remain committed to their plan and consider the diversification of their portfolio. Moving money to the sidelines may sound tempting, but for investors with a lengthier time horizon, staying the course may be beneficial in the long run.”

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The survey explored investor views on sector opportunities for the first quarter of 2023:

• Energy – Amid geopolitical concerns and hopes of a China rebound, half (50%) of investors see more opportunity in this volatile but top performing sector of 2022.
• Health care – Many investors (40%) see opportunity in this historically defensive sector as they look to shore up their portfolios.
• IT – Over one in three (35%) investors may see a bargain opportunity in IT amid rising rates typically weighing on tech stocks and their valuations.