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Why 2022 may bring a harsh awakening for individual investors

In global surveys conducted between 2016 and 2021, it was found that the equity return expectations of individual investors have risen higher every year, rising from 9.5% in 2016 to 13% in 2021. But Goodsell also noted that at the time, equity markets are performing exceptionally well, creating prime conditions for people to fall victim to recency bias.

“They may think ‘I got this amount over the years, so maybe I should get it over the long term. But the long term returns are not as good as they have been recently.’ “For example, the S&P 500 returned about 27% last year. But if you look at the first 20 years of this century, they’ve averaged about 8.2%. So there’s a big discrepancy that really depends on how you think about things.” can shape the way.”

The untrained investor may feel that the stock market is bulletproof; Finally, the S&P’s performance last year came as the world continued to struggle under the weight of the COVID-19 pandemic. But over the past two years, broader equity markets have also received significant support in the form of unprecedented financial and monetary stimulus from banks, and the pandemic lockdown has created a gale-force tailwind for technology companies.

In its most recent survey of fund selectors, Natixis has found that Covid-fuelled disruption is still a concern, but not to the extent it has been. Out of 436 fund selectors across leading wealth management, private bank and insurance platforms globally, 40% identified the COVID variant as a top economic concern. This leaves behind concerns over less supportive central bank policy (45%) and supply chain disruption (51%).

“We’re certainly seeing them shift their focus to economic factors over public health factors,” Goodsell says.

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