Millionaires see strong gains in the market in 2021

US millionaires are betting on a strong stock market next year, with many expecting double-digit gains, according to the CNBC Millionaire Survey.

In all, 70% of millionaires expect the S&P 500 to grow by at least 5% next year, according to a survey of at least $ 1 million in households with investable assets. Nearly a third of those surveyed expect earnings of at least 10% in 2021, according to the survey.

The S&P 500 is heading for the last weeks of 2020, up almost 14%.

Despite the fact that market levels are close to or at a record level, most millionaires intend to maintain or add to their stocks next year, according to the survey. Only 9% intend to reduce their ownership of the shares. Those increases in the face of the Covid pandemic and economic uncertainty could be a strong tailwind for the market, given that millionaires own more than 85% of the shares they hold individually.

“I expected to see more of them making plans to exit the market at these levels,” said George Walper, president of Spectrem Group, a research and consulting firm. “They have clearly adapted to volatility.”

Half of the millionaires surveyed expect their personal wealth to increase next year, while another 40% say they expect it to stay the same.

Millionaires’ views on the biggest financial risks next year depend more on political party affiliation than on wealth levels. Republican millionaires cited taxes as the biggest risk to their wealth in 2021, while Democratic millionaires cited the virus as the biggest risk.

Less than a third of millionaires say the economy will be weaker next year, and most say interest rates will remain the same, which will help stocks. Their bright outlook is yet another sign of a K-shaped recovery in which middle and lower employees and small businesses are still struggling, while higher-income workers and investors continue to see improvements.

Shares are the preferred investment category for millionaires next year, with 44% planning to add shares. When asked in which market sectors it intends to add more money in 2021, the technology ranked first, followed by medical and financial assistance.

“Given everything that’s going on around us, they’re optimistic,” Walper said. “It’s the vaccine and the hope of a reopening.”

Spectrem Group conducted the survey for CNBC. It surveyed 750 participants with investable assets of 1 million or more in November.