Connect with us

Markets in a Minute

The Top Sources Americans Use to Make Investment Decisions (2001-2019)

Published

on

This infographic is available as a poster.

Investment Decisions

investment decisions

This infographic is available as a poster.

How People Make Investment Decisions

When you’re making investment decisions, there can be a lot of different things to consider. Which types of asset classes should you hold? How much risk are you comfortable with? How much will you need to retire?

It’s no surprise, then, that few Americans make these decisions on their own. This Markets in a Minute from New York Life Investments shows which sources of information families rely on for investment decisions, and how their popularity has changed over time.

The Main Sources of Investment Information Over Time

According to data from the U.S. Federal Reserve Survey of Consumer Finances, here is the percentage of families who reported using each source.

Source200120102019
Business professionals49%57%57%
Internet15%33%45%
Friends, relatives, associates36%40%44%
Advertisements and media27%26%20%
Calling around19%16%13%
Other15%8%9%
Does not invest9%12%8%

Other consists of nine options: don’t shop, material from work, past experience, personal research, other institution, self or spouse, shop around, store or dealer, and telemarketer.

Business professionals, such as financial planners, accountants, and lawyers, remain the most relied upon source. Their popularity has remained stable since 2010.

Traditional advertisements and media, such as through TV and radio, have dropped in overall popularity. The percentage of Americans who call around to financial institutions for investment information has also declined.

Conversely, friends, relatives, and associates have grown in popularity as an information source. Meanwhile, the internet has been the fastest-growing source, used by three times more families in 2019 compared to 2001.

Digital Investment Decisions

A separate survey conducted by consulting firm Brunswick revealed the specific places people go online when making investment decisions.

Digital Investment Decisions

Search engines, blogs, and specialist email newsletters are the most popular sources. Among blogs, Seeking Alpha is the most popular, used by 34% of those surveyed.

Twitter and LinkedIn are the most commonly-used social media platforms. The proportion of investors using Twitter for information has grown by 36 percentage points since 2014.

Implications for Investors and Advisors

If you’re an investor, this information can help you gauge how your research process compares to the general American population. Is your preferred information source popular with others, or is it less common? For those who have yet to get started investing, this may give you some ideas on where you can start looking for information.

If you’re an advisor, these research trends can have important implications for your business. While business professionals remain the most-used source, other sources of information are shifting. Traditional advertising and inbound calls from potential clients continue to be less common. Instead, advisors may want to shift their focus to building an online presence and increasing referrals from existing clients.

Advisor channel footer

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Continue Reading
Comments

Markets in a Minute

Charted: The Rise of Stock Buybacks Over 20 Years

Unlike the last two downturns, stock buybacks could hit a record $1.3T in 2022. We chart their growth over the last two decades.

Published

on

Stock Buybacks

This infographic is available as a poster.

Chart: The Rise of Stock Buybacks Over 20 Years

Despite market turbulence, stock buybacks are on track to hit record levels by year-end.

Spurring this wave of buybacks are strong corporate cash flows⁠—sitting near $2 trillion—and a 1% excise tax on buybacks approaching in 2023. This signals a vote of confidence from corporations on their financial health even as a recession looms large.

In this Markets in a Minute from New York Life Investments, we chart the growth of buybacks over the last two decades and the implications for investors looking ahead.

How Stock Buybacks Work

In stock buybacks, corporations buy their own shares from existing shareholders. This reduces the number of shares in the market and boosts earnings per share. Often, this can increase share prices given the rise in earnings growth.

It was not until 1982 that share repurchases became legal, driving wider usage among corporations as a capital allocation tool.

By comparison, dividends are another common form of distributing capital back to shareholders.

Dividends are bound by strict policies and do not offer the same tax advantages and flexibility as buybacks. While dividends are taxed as income, buybacks are taxed as capital gains—making them a preferential choice for investors. Given these advantages, stock buybacks have outpaced dividends over the last two decades.

In fact, in the third quarter of 2022, an estimated one in five companies in the S&P 500 Index conducted buybacks that in turn increased their earnings per share by at least 4% year-over-year.

Stock Buyback Trends

As the below table shows, stock buybacks in the S&P 500 Index outnumber dividends by about double in 2022:

YearS&P 500 Stock BuybacksS&P 500 Dividends
2022*$1.00T$0.54T
2021$0.88T$0.51T
2020$0.52T$0.48T
2019$0.73T$0.49T
2018$0.81T$0.46T

Source: S&P Dow Jones Indices (Sep 2022). *For the 12-months ending June 2022.

However, stock buybacks fluctuate more often than dividends since corporations can turn them on or off. For example, in 2020, buybacks sharply declined given growing financial uncertainty. Meanwhile, companies issued dividends at a steady pace.

In this way, when share prices decline, buybacks typically decrease.

Yet unlike the last two recessions in 2008 and 2020, buybacks have shown notable strength in 2022 in spite of falling share prices.

What Are the Top Sectors for Stock Buybacks?

We can see in the table below that the biggest share repurchasers are in the tech sector, with $2.1 trillion in buybacks since 2009.

SectorCumulative Buybacks Since 2009Q2 Buybacks
Information Technology$2,060.4B$72.0B
Financials$1,265.0B$21.2B
Consumer Discretionary $941.7B$27.6B
Health Care$929.1B$17.2B
Industrials$717.6B$17.4B
Consumer Staples$548.1B$10.7B
Communication Services$369.6B$29.4B
Energy$337.9B$13.4B
Materials$187.0B$8.7B
Utilities $26.8B$0.5B
Real Estate$16.9B$1.1B
Total$7,382.6B$219.6B

Source: Yardeni Research (Nov 2022). Represents stock buybacks for S&P 500 Index sectors.

On the other hand, utilities and other capital-intensive sectors tend to spend less on buybacks in contrast to asset-light sectors such as tech and financials.

What is also characteristic to share buybacks is their concentration. As we have seen in the second quarter this year, the top 20% of buybacks make up 47% of all repurchases across the S&P 500 Index.

New Tax On Stock Buybacks

Stock buybacks have drawn criticism for using cash to benefit shareholders instead of boosting production or improving the quality of the business.

In response, beginning in 2023, the Inflation Reduction Act puts a 1% excise tax on buybacks.

What this means is that public companies based in the U.S. must now pay a 1% tax on share repurchases, which could result in millions of additional expenses. Given this new tax rule, corporations may be accelerating buybacks ahead of year-end.

Implications for Investors

As stock buybacks have grown in prominence, it’s worth noting that not all are equal.

When a buyback aligns with a company’s long-term plan, and the company can cover their operational expenses, it can support the stability and growth of the company. When stock prices are volatile, companies can repurchase shares when they are undervalued.

By contrast, if a company takes on excess leverage in order to buyback shares, it can contribute to lower financial resilience. When a company uses a buyback to opportunistically repurchase shares, the boost in share prices may be short-lived.

In addition, it could also prevent capital from being directed to growth initiatives. In this way, it’s important to consider stock buybacks on a case-by-case basis.

With this in mind, investors can look to companies with healthy balance sheets that can weather economic storms. Here, companies that illustrate price discipline and buy back shares at a discount may help build long-term value, providing benefits to investors who stay the course.

Advisor channel footer

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Continue Reading

Markets in a Minute

Mapped: Global Energy Prices, by Country in 2022

Energy prices have been extremely volatile in 2022. Which countries are seeing the highest prices in the world?

Published

on

Energy Prices

This infographic is available as a poster.

Mapped: Global Energy Prices, by Country in 2022

For some countries, energy prices hit historic levels in 2022.

Gasoline, electricity, and natural gas prices skyrocketed as Russia’s invasion of Ukraine ruptured global energy supply chains. Households and businesses are facing higher energy bills amid extreme price volatility. Uncertainty surrounding the war looms large, and winter heating costs are projected to soar.

Given the global consequences of the energy crisis, this Markets in a Minute from New York Life Investments shows the price of energy for households by country.

1. Global Energy Prices: Gasoline

Which countries and regions pay the most for a gallon of gas?

RankCountry/ RegionGasoline Prices
(USD per Gallon)
1🇭🇰 Hong Kong$11.1
2🇨🇫 Central African Republic$8.6
3🇮🇸 Iceland$8.5
4🇳🇴 Norway$8.1
5🇧🇧 Barbados$7.8
6🇩🇰 Denmark$7.7
7🇬🇷 Greece$7.6
8🇫🇮 Finland$7.6
9🇳🇱 Netherlands$7.6
10🇧🇪 Belgium$7.4
11🇬🇧 United Kingdom$7.2
12🇪🇪 Estonia$7.2
13🇨🇭 Switzerland$7.2
14🇸🇬 Singapore$7.2
15🇸🇪 Sweden$7.1
16🇸🇨 Seychelles$7.1
17🇮🇱 Israel$7.0
18🇩🇪 Germany$7.0
19🇺🇾 Uruguay$7.0
20🇼🇫 Wallis and Futuna$7.0
21🇱🇮 Liechtenstein$6.9
22🇮🇪 Ireland$6.8
23🇵🇹 Portugal$6.8
24🇱🇻 Latvia$6.7
25🇧🇿 Belize$6.7
26🇦🇱 Albania$6.6
27🇦🇹 Austria$6.6
28🇲🇨 Monaco$6.6
29🇪🇸 Spain$6.6
30🇨🇿 Czech Republic$6.5
31🇲🇼 Malawi$6.5
32🇰🇾 Cayman Islands$6.4
33🇸🇰 Slovakia$6.4
34🇲🇺 Mauritius$6.3
35🇱🇺 Luxembourg$6.3
36🇱🇹 Lithuania$6.3
37🇦🇩 Andorra$6.3
38🇮🇹 Italy$6.3
39🇺🇬 Uganda$6.2
40🇭🇺 Hungary$6.2
41🇯🇴 Jordan$6.2
42🇸🇾 Syria$6.1
43🇫🇷 France$6.0
44🇧🇮 Burundi$6.0
45🇧🇸 Bahamas$6.0
46🇳🇿 New Zealand$5.8
47🇸🇲 San Marino$5.8
48🇭🇷 Croatia$5.8
49🇷🇴 Romania$5.7
50🇾🇹 Mayotte$5.7
51🇷🇼 Rwanda$5.7
52🇿🇲 Zambia$5.7
53🇷🇸 Serbia$5.7
54🇱🇦 Laos$5.6
55🇲🇳 Mongolia$5.6
56🇰🇪 Kenya$5.6
57🇨🇾 Cyprus$5.6
58🇯🇲 Jamaica$5.5
59🇲🇰 Northern Macedonia$5.5
60🇨🇱 Chile$5.5
61🇧🇦 Bosnia$5.5
62🇱🇨 Saint Lucia$5.5
63🇵🇱 Poland$5.4
64🇩🇴 Dominican Republic$5.4
65🇨🇦 Canada$5.4
66🇲🇦 Morocco$5.4
67🇦🇼 Aruba$5.4
68🇸🇮 Slovenia$5.4
69🇧🇬 Bulgaria$5.3
70🇵🇪 Peru$5.3
71🇱🇰 Sri Lanka$5.3
72🇨🇷 Costa Rica$5.2
73🇲🇬 Madagascar$5.2
74🇬🇳 Guinea$5.2
75🇳🇵 Nepal$5.2
76🇲🇿 Mozambique$5.2
77🇳🇮 Nicaragua$5.2
78🇲🇱 Mali$5.1
79🇸🇳 Senegal$5.1
80🇺🇦 Ukraine$5.2
81🇩🇲 Dominica$5.0
82🇲🇪 Montenegro$5.0
83🇲🇹 Malta$5.0
84🇲🇩 Moldova$5.0
85🇨🇩 DR Congo$5.0
86🇨🇼 Curacao$5.0
87🇨🇻 Cape Verde$4.9
88🇧🇩 Bangladesh$4.9
89🇱🇷 Liberia$4.9
90🇰🇭 Cambodia$4.8
91🇮🇳 India$4.8
92🇨🇺 Cuba$4.8
93🇭🇳 Honduras$4.7
94🇬🇪 Georgia$4.7
95🇿🇦 South Africa$4.7
96🇹🇿 Tanzania$4.7
97🇫🇯 Fiji$4.7
98🇨🇳 China$4.7
99🇲🇽 Mexico$4.6
100🇬🇹 Guatemala$4.6

Source: GlobalPetrolPrices.com. As of October 31, 2022. Represents average household prices.

At an average $11.1 USD per gallon, households in Hong Kong pay the highest for gasoline in the world—more than double the global average. Both high gas taxes and steep land costs are primary factors behind high gas prices.

Like Hong Kong, the Central African Republic has high gas costs, at $8.6 USD per gallon. As a net importer of gasoline, the country has faced increased price pressures since the war in Ukraine.

Households in Iceland, Norway, and Denmark face the highest gasoline costs in Europe. Overall, Europe has seen inflation hit 10% in September, driven by the energy crisis.

2. Global Energy Prices: Electricity

Extreme volatility is also being seen in electricity prices.

The majority of the highest household electricity prices are in Europe, where Denmark, Germany, and Belgium’s prices are about double that of France and Greece. For perspective, electricity prices in many countries in Europe are more than twice or three times the global average of $0.14 USD per kilowatt-hour.

Over the first quarter of 2022, household electricity prices in the European Union jumped 32% compared to the year before.

RankCountry/ RegionElectricity Prices
(kWh, USD)
1🇩🇰 Denmark$0.46
2🇩🇪 Germany$0.44
3🇧🇪 Belgium$0.41
4🇧🇲 Bermuda$0.40
5🇰🇾 Cayman Islands$0.35
6🇯🇲 Jamaica$0.34
7🇬🇧 United Kingdom$0.32
8🇪🇸 Spain$0.32
9🇳🇱 Netherlands$0.32
10🇧🇧 Barbados$0.32
11🇪🇪 Estonia$0.32
12🇱🇹 Lithuania$0.31
13🇦🇹 Austria$0.31
14🇮🇹 Italy$0.30
15🇨🇿 Czech Republic$0.29
16🇨🇻 Cape Verde$0.28
17🇮🇪 Ireland$0.28
18🇸🇪 Sweden$0.27
19🇧🇸 Bahamas$0.26
20🇬🇹 Guatemala$0.26
21🇱🇮 Liechtenstein$0.26
22🇨🇾 Cyprus$0.25
23🇷🇼 Rwanda$0.25
24🇭🇳 Honduras$0.24
25🇺🇾 Uruguay$0.24
26🇵🇹 Portugal$0.24
27🇸🇻 El Salvador$0.23
28🇱🇻 Latvia$0.22
29🇫🇮 Finland$0.22
30🇱🇺 Luxembourg$0.22
31🇧🇿 Belize$0.22
32🇯🇵 Japan$0.22
33🇨🇭 Switzerland$0.22
34🇵🇪 Peru$0.21
35🇰🇪 Kenya$0.21
36🇦🇺 Australia$0.21
37🇧🇷 Brazil$0.20
38🇲🇱 Mali$0.20
39🇸🇬 Singapore$0.19
40🇷🇴 Romania$0.19
41🇧🇫 Burkina Faso$0.19
42🇸🇮 Slovenia$0.19
43🇬🇦 Gabon$0.19
44🇸🇰 Slovakia$0.19
45🇦🇼 Aruba$0.19
46🇬🇷 Greece$0.19
47🇫🇷 France$0.18
48🇳🇿 New Zealand$0.18
49🇹🇬 Togo$0.18
50🇳🇮 Nicaragua$0.17
51🇻🇪 Venezuela$0.17
52🇵🇦 Panama$0.17
53🇵🇭 Philippines$0.17
54🇵🇱 Poland$0.17
55🇮🇱 Israel$0.16
56🇺🇲 U.S.$0.16
57🇺🇬 Uganda$0.16
58🇭🇰 Hong Kong$0.16
59🇸🇳 Senegal$0.16
60🇲🇴 Macao$0.15
61🇨🇱 Chile$0.15
62🇰🇭 Cambodia$0.15
63🇿🇦 South Africa$0.14
64🇲🇺 Mauritius$0.14
65🇲🇬 Madagascar$0.14
66🇭🇷 Croatia$0.14
67🇮🇸 Iceland$0.14
68🇳🇴 Norway$0.13
69🇲🇹 Malta$0.13
70🇲🇿 Mozambique$0.13
71🇨🇴 Colombia$0.13
72🇧🇬 Bulgaria$0.12
73🇲🇻 Maldives$0.12
74🇨🇷 Costa Rica$0.12
75🇨🇦 Canada$0.11
76🇲🇼 Malawi$0.11
77🇨🇮 Ivory Coast$0.11
78🇳🇦 Namibia$0.11
79🇲🇦 Morocco$0.11
80🇹🇭 Thailand$0.10
81🇦🇲 Armenia$0.10
82🇯🇴 Jordan$0.10
83🇹🇿 Tanzania$0.10
84🇸🇿 Swaziland$0.10
85🇪🇨 Ecuador$0.10
86🇧🇼 Botswana$0.10
87🇩🇴 Dominican Republic$0.10
88🇲🇰 Northern Macedonia$0.10
89🇦🇱 Albania$0.10
90🇱🇸 Lesotho$0.09
91🇸🇱 Sierra Leone$0.09
92🇮🇩 Indonesia$0.09
93🇧🇾 Belarus$0.09
94🇭🇺 Hungary$0.09
95🇧🇦 Bosnia & Herzegovina$0.09
96🇹🇼 Taiwan$0.09
97🇰🇷 South Korea$0.09
98🇲🇽 Mexico$0.09
99🇷🇸 Serbia$0.09
100🇨🇩 DR Congo$0.08

Source: GlobalPetrolPrices.com. As of March 31, 2022. Represents average household prices.

In the U.S., consumer electricity prices have increased nearly 16% annually compared to September last year, the highest increase in over four decades, fueling higher inflation.

However, households are more sheltered from the impact of Russian supply disruptions due to the U.S. being a net exporter of energy.

3. Global Energy Prices: Natural Gas

Eight of the 10 highest natural gas prices globally fall in Europe, with the Netherlands at the top. Overall, European natural gas prices have spiked sixfold in a year since the invasion of Ukraine.

RankCountry/ RegionNatural Gas Prices
(kWh, USD)
1🇳🇱 Netherlands$0.41
2🇸🇪 Sweden$0.24
3🇩🇪 Germany$0.21
4🇧🇷 Brazil$0.20
5🇩🇰 Denmark$0.19
6🇪🇸 Spain$0.17
7🇮🇹 Italy$0.16
8🇦🇹 Austria$0.16
9🇸🇬 Singapore$0.15
10🇧🇪 Belgium$0.15
11🇭🇰 Hong Kong$0.14
12🇨🇿 Czech Republic$0.14
13🇬🇷 Greece$0.12
14🇫🇷 France$0.12
15🇯🇵 Japan$0.11
16🇬🇧 United Kingdom$0.10
17🇨🇭 Switzerland$0.10
18🇨🇱 Chile$0.10
19🇵🇹 Portugal$0.09
20🇧🇧 Barbados$0.09
21🇵🇱 Poland$0.09
22🇧🇬 Bulgaria$0.09
23🇮🇪 Ireland$0.08
24🇦🇺 Australia$0.07
25🇲🇽 Mexico$0.07
26🇳🇿 New Zealand$0.06
27🇸🇰 Slovakia$0.06
28🇺🇲 U.S.$0.05
29🇰🇷 South Korea$0.04
30🇨🇴 Colombia$0.04
31🇨🇦 Canada$0.03
32🇷🇸 Serbia$0.03
33🇹🇼 Taiwan$0.03
34🇺🇦 Ukraine$0.03
35🇲🇾 Malaysia$0.03
36🇭🇺 Hungary$0.03
37🇹🇳 Tunisia$0.02
38🇦🇿 Azerbaijan$0.01
39🇧🇭 Bahrain$0.01
40🇧🇩 Bangladesh$0.01
41🇹🇷 Turkey$0.01
42🇷🇺 Russia$0.01
43🇦🇷 Argentina$0.01
44🇧🇾 Belarus$0.01
45🇩🇿 Algeria$0.003
46🇮🇷 Iran$0.001

Source: GlobalPetrolPrices.com. As of March 31, 2022. Represents average household prices.

The good news is that the fall season has been relatively warm, which has helped European natural gas demand drop 22% in October compared to last year. This helps reduce the risk of gas shortages transpiring later in the winter.

Outside of Europe, Brazil has the fourth highest natural gas prices globally, despite producing about half domestically. High costs of cooking gas have been especially challenging for low-income families, which became a key political issue in the run-up to the presidential election in October.

Meanwhile, Singapore has the highest natural gas prices in Asia as the majority is imported via tankers or pipelines, leaving the country vulnerable to price shocks.

Increasing Competition

By December, all seaborne crude oil shipments from Russia to Europe will come to a halt, likely pushing up gasoline prices into the winter and 2023.

Concerningly, analysis from the EIA shows that European natural gas storage capacities could sink to 20% by February if Russia completely shuts off its supply and demand is not reduced.

As Europe seeks out alternatives to Russian energy, higher demand could increase global competition for fuel sources, driving up prices for energy in the coming months ahead.

Still, there is some room for optimism: the World Bank projects energy prices will decline 11% in 2023 after the 60% rise seen after the war in Ukraine in 2022.

Advisor channel footer

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Continue Reading
New York Life Investments

Subscribe

Are you a financial advisor?

Subscribe here to get every update, including when new charts or infographics go live:

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Popular