The psychological condition made famous by Patty Hearst, in which captives become grateful toward their captors, has now taken hold of the investor class. Surviving a two year period during which 41% of market days saw a 1% or greater swing, investors have become glad just to earn something - just to break even – on their investment capital.
This investor version of the Stockholm Syndrome is apparent in the results of a recent poll by Fidelity Investments (via Boston Biz Journal):
According to the survey, more than half (55 percent) of investors say any positive gains in their portfolios in these markets qualifies as a success, while another 23 percent believe that break-even investment returns can be considered successful.
754 investors were surveyed in late September – a pretty hefty sample group compared to most investor polls. That investors are happy to “just not lose money” is not news to those of us on the front lines. It is a sentiment we hear all the time.
This type of gratitude after years of market torment is reminiscent of the kidnapee who effusively thanks his captors for loosening the bonds around his wrists. When I got into the business, the expectation from the investor class was an 8% to 11% annualized return from their equities, come hell or high water. These days, we’re talking boiled shoe leather and an hour of sunlight in the yard.