In a recent article for The Wall Street Journal, columnist Jason Zweig writes, “Bit by bit, the myth of the ‘dumb money’ is dying.”

Although Wall Street has long characterized individual investors as being “ill-informed, fickle and hapless” and therefore in need of fee-based advice, Zweig argues that the claim is “nonsense” and that “new evidence of its foolishness is piling up fast.”

He cites a recent study of Vanguard Group clients that shows them to be generally patient and prudent and prone to following the “gospel preached by the firm’s late founder, John Bogle: Diversify across a few dirt-cheap market-tracking index funds, then hold them for decades.” [The article notes that the study is based on surveys of more than 11,000 investors which Vanguard paid for.]

Zweig summarizes the survey findings:

• Respondents estimated moderate stock market returns of 5.2% over the next 12 months and 6.3% over the next ten years;
• Study participants have an average of 68% of their portfolios invested in stocks and “even when they raise or lower their expectations of future stock returns, they seldom make big trades based on those beliefs;”
• Although U.S. stocks rose steadily during the study period (from February 2017), most investors didn’t significantly change their portfolios or their expectations;
• While older survey respondents have lower exposures to stocks, the survey found that wealthier investors don’t take a lot more risk than those with less money.

The biggest determinant of how much investors channel into stocks, writes Zweig, is “how confident they are that their predictions of stock returns will be proven accurate—along with how frequently they log into their account and how often they trade.”