Corporate Finance and Strategy
The rules of business and for maintaining competitive advantage are changing. We help companies reimagine strategy and value creation in a fast-paced world.
By Jeff Kotzen, Hady Farag, Julien Ghesquieres, Gregory Rice, Dan Riff, Callan Sainsbury, and Rachna Sachdev
February 12, 2024
As we navigate an uncertain world, how do investors view the US economy and stock market? And what do they expect from business leaders?
The BCG Investor Perspectives Series brings the voice of the investor to business leaders and board members.
Our most recent survey, conducted January 16–18, 2024, finds that investors appear to be more confident in a soft landing for the US economy, as 52% expect a recession by year-end, down from 72% in October 2023. At the same time, investors remain bearish for 2024, with only 37% being bullish. Investors also anticipate an average three-year return of 6.5% for the S&P 500. While up from 6% in October 2023, that is the second-lowest level across the 25 surveys conducted since 2020.
An explanation for investors’ bearishness may lie in our finding that 70% of investors (down slightly from 77% in October 2023) are concerned about the Federal Reserve’s interest rate policy and its impact on the US economy. In addition, 45% of investors believe that the market is too optimistic in its expectation that the Federal Reserve will be able to engineer a soft landing, compared with only 9% that believe the market is too pessimistic in this regard.
Against this backdrop, the survey highlights several important investor perspectives and expectations facing companies today. First, investors continue to expect companies to deliver the best of both worlds—short-term performance and long-term growth and value creation. Most investors (84%) want companies to fully deliver on near-term EPS guidance and consensus, and the same share want them to prioritize long-term investments.
Second, investors’ emphasis on balance sheet health and capital allocation priorities reflects a relatively conservative, risk-averse mindset. Roughly 69% of investors avoid companies with more than three times net debt to EBITDA. Moreover, 74% expect companies to pay dividends that are at least at historical levels, while only 38% advocate for aggressive share buybacks.
Third, investors are supportive of companies reshaping their portfolios for the long term. Many investors (78%) highlight that companies should consider divestitures, while 75% remain open to supporting compelling, opportunistic tuck-in acquisitions. And 65% of investors even support larger, transformative acquisitions, as long as any increase in leverage is temporary.
These and additional insights into investors’ perspectives are presented in the slideshow below.
BCG Investor Perspectives Series: Q4 2023 | October 10–13, 2023
Few investors—38%—are bullish for 2024, while 65% are bullish for the next three years. However, investors expect the S&P 500 to return only 6% over that time frame. Interest rates remain investors’ top concern, and 73% have reduced their exposure to companies with higher leverage.
BCG Investor Perspectives Series: Q2 2023 | June 5–8, 2023
Investors remain bearish, with 78% expecting inflation to remain elevated through the end of 2023. Investors are also increasingly conservative about capital allocation, especially for M&A and share buybacks.
BCG Investor Perspectives Series: Q1 2023 | February 13-22, 2023
Investors are less bearish than they were in Q4 2022, but they remain concerned about elevated inflation and a potential recession in 2023. At the same time, optimism for the next three years is at a series high—73% of investors are bullish, compared with the series average of 61%.
BCG Investor Perspectives Series: Pulse Check #21 | October 7-11, 2022
Only 5% of investors are bullish for 2022, and many think a US recession is around the corner. The number one macro concern for 87% of investors is inflation and the Federal Reserve’s policy.
BCG Investor Perspectives Series: Pulse Check #20 | June 17-21, 2022
Investors are the most pessimistic they have been since the Global Financial Crisis. However, the majority of investors are bullish for the next three years, which is reflected in an average annual TSR of 8.5%.
BCG Investor Perspectives Series: Pulse Check #19 | March 18-22, 2022
Investors are more bearish on the economy, with 65% expecting a recession in 2022 or 2023. The importance of geopolitical risks has grown, and many—71%—want companies to disclose their exposure to Russia.
COVID-19 Investor Pulse Check #18 | January 28-31, 2022
Investors are more bearish on the economy and the stock market—especially for 2022. And while they see a company’s long-term growth outlook as the primary investment criterion, a series high of 86% expect companies to deliver on guidance.
COVID-19 Investor Pulse Check #17 | October 29-31, 2021
Investor concern about the business impact of the pandemic is waning—with 55%, down from 63% in June, seeing it as an important investment consideration. But investor concerns over inflation, interest rates, and macroeconomic growth are on the rise—and investors increasingly expect management to deliver on forecasts.
COVID-19 Investor Pulse Check #16 | June 19-20, 2021
While investors are more bullish on the US economy, they are less optimistic on the stock market, with 39%—down from 50% in April—bullish for the rest of 2021. And 63% continue to view COVID-19 as an important consideration in their investment decisions.
COVID-19 Investor Pulse Check #15 | April 29-30, 2021
Investor expectations may be starting to return to prepandemic norms. While 88% of investors (down from a series high of 95% in February) want management to invest in building advantage even at the expense of EPS, a series high of 79% expect management to deliver EPS that at least meets guidance or consensus.
COVID-19 Investor Pulse Check #14 | February 6-7, 2021
A majority of investors expect the pandemic’s economic impact will extend through Q4 2021. And 95% of investors believe companies should build capabilities now, even at the expense of short-term results.
COVID-19 Investor Pulse Check #13 | December 12-13, 2020
Most investors still offer management unprecedented flexibility to invest for long-term advantage. But they also expect management to deliver EPS that at least matches revised guidance.
COVID-19 Investor Pulse Check #12 | November 13-14, 2020
Investors are more bullish on the US economy and stock market than they were just one month ago. And while investors continue to offer management exceptional latitude, more expect companies to maintain their dividend.
COVID-19 Investor Pulse Check #11 | October 16-17, 2020
Investors are more bearish on the duration of the pandemic and the outlook for 2021. In addition, 74% think management teams should move quickly to revise plans after the US election.
COVID-19 Investor Pulse Check #10 | September 18-19, 2020
A majority of investors expect the S&P 500 to return to earnings growth by the end of Q2 2021. And 70% support reinstating dividends at some level for COVID-resilient companies by the end of Q1 2021.
COVID-19 Investor Pulse Check #9 | August 7-9, 2020
A majority of investors expect either a W-shaped or U-shaped recovery. And 71% believe management should actively pursue acquisitions to strengthen the business, preferably using tuck-in deals.
COVID-19 Investor Pulse Check #8 | July 17-19, 2020
Investors expect the pandemic’s impact on the US economy to last longer—through Q2 2021. In addition, only 11% of investors think management is seizing the moment to build advantage.
COVID-19 Investor Pulse Check #7 | June 26-28, 2020
Investors are more pessimistic on the timing and shape of the recovery. This edition also includes investor perspectives on management incentives in the current environment.
COVID-19 Investor Pulse Check #6 | June 5-7, 2020
Investors are more bullish than they were in April—and still willing to offer management significant flexibility to invest for the long term. They also want discretionary investment focused on financial health and future growth.
COVID-19 Investor Pulse Check #5 | May 15-17, 2020
Investors are less bullish on the market than they were one month ago, and they want honest and transparent communications from management.
COVID-19 Investor Pulse Check #4 | May 1-3, 2020
Investors expect the pandemic’s impact on the US economy to continue through the end of 2020, and less than half of them are bullish for the market in 2021.
COVID-19 Investor Pulse Check #3 | April 17-19, 2020
Investors are increasingly negative on the economy in 2020 and on the stock market in 2021. See the results from the investor survey conducted April 17–19.
COVID-19 Investor Pulse Check #2 | April 3-5, 2020
Investors are bearish now, but they are increasingly bullish for 2021 and 2022—and willing to offer executives unexpected flexibility to navigate the crisis.
COVID-19 Investor Pulse Check #1 | March 20-22, 2020
BCG’s ongoing survey provides insights on the US market and economy direct from the portfolio managers and senior analysts making buy, sell, and hold decisions right now.
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