Last summer, Gallup ran a poll asking Americans what they thought would make the best long-term investment. The results:
- 34% said gold.
- 19% said real estate.
- 17% said stocks
- 14% said savings accounts
- 10% said bonds
This was telling, I wrote. There are only a few ironclad rules of investing. One is that there's a negative correlation between sentiment and future returns. When the public expects outsize returns, they practically guarantee otherwise. When people won't touch an asset because they think it's toxic, the stage is set for outperformance.
So I issued a challenge:
Can anyone think of a time when an asset the general public was most bullish (or bearish) on performed the best (or worst) over the subsequent 10 or 15 years? I can't. If one exists, share it in the comment section below. If not, think long and hard about how you feel about stocks and gold.
One year doesn't a trend make, nor is it "long-term," but since that survey was taken, gold has dropped about 1%, while the S&P 500
Anyways, Gallup ran the same poll last week, asking Americans what they think will make the best long-term investment. Drumroll, please…
- 28% said gold.
- 20% said real estate.
- 19% said stocks
- 19% said savings accounts.
- 8% said bonds.
Somewhat different from last summer, but gold still takes the cake.
Another interesting point: The fact that Americans are as bullish on savings accounts that yield nothing as they are on stocks that yield 3% and can grow earnings along with inflation is telling. History has a habit of humbling those kinds of outlooks.
What do you think?
Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. Follow him on Twitter @TMFHousel. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.