Managing Director & Senior Partner
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.
ABOUT BOSTON CONSULTING GROUP
Boston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. BCG was the pioneer in business strategy when it was founded in 1963. Today, we work closely with clients to embrace a transformational approach aimed at benefiting all stakeholders—empowering organizations to grow, build sustainable competitive advantage, and drive positive societal impact.
Our diverse, global teams bring deep industry and functional expertise and a range of perspectives that question the status quo and spark change. BCG delivers solutions through leading-edge management consulting, technology and design, and corporate and digital ventures. We work in a uniquely collaborative model across the firm and throughout all levels of the client organization, fueled by the goal of helping our clients thrive and enabling them to make the world a better place.
© Boston Consulting Group 2024. All rights reserved.
For information or permission to reprint, please contact BCG at firstname.lastname@example.org. To find the latest BCG content and register to receive e-alerts on this topic or others, please visit bcg.com. Follow Boston Consulting Group on Facebook and X (formerly Twitter).