Bears Mostly Absent as Poll Respondents Express Optimism
What will it take to make individual investors downbeat about stocks? More than what’s been thrown at them so far, apparently.
A new national Times Poll indicates that nearly 65% of Americans who already own stocks say they have “a great deal” or “a lot” of confidence in the stock market over the next 12 months, even as interest rates continue to rise and many market sectors remain far below their highs.
Moreover, only 14% of current stock investors believe the market’s recent gyrations will have a “fairly bad” or “very bad” effect on their finances over the next 12 months.
The poll of 1,502, done by phone last Thursday through Sunday, found that about half of those surveyed own stocks or stock mutual funds. That matches other recent surveys that suggest about half of U.S. households own stock, up from about 20% in the late-1980s.
The charts on this page reflect only the responses of those who are currently in the market.
As in many other surveys, the vast majority of investors in the Times poll insist they’re in stocks for the long haul: 91% said they are long-term investors, while just 3% said they are “in and out” of the market.
Many Wall Street pros who are bearish on stocks say that even “long-term” investors may change their views if the stock market’s slump becomes prolonged, or more severe.
The Times Poll confirms that many investors are newcomers, and weren’t in stocks for the last significant bear market, in 1990.
About 35% of respondents who own stocks (including mutual funds) said they’ve been in the market for five years or less. Twenty-seven percent have been in for six to 10 years, and 35% for more than 11 years.
The powerful bull market of the last few years has clearly boosted long-term optimism. Of those who own stocks, 25% said they have more confidence in the stock market over the long term than they did three years ago.
About 65% said they have the same level of long-term confidence that they had three years ago. Only 6% said they have less confidence.
Another question asked in the poll suggests that the Federal Reserve’s hopes that weaker stock prices might reduce financial confidence--and help slow the economy--aren’t going to be fulfilled, at least based on what people say right now.
Fully 75% of respondents who own stocks said they don’t feel more financially insecure when their stocks are doing worse. Only 23% said they do feel more insecure.
On the flip side, 34% of respondents said they do feel more secure about their finances when their stocks are doing better.
In other words, good news from the market registers more strongly in terms of general financial confidence than does bad news, the poll suggests.
Are investors far too sanguine, considering the threat of higher interest rates and the pasting many stocks have taken over the last two months?
That’s what the market’s pessimists argue. But many investors note that they have history on their side: Over the long run, the market has always come back--though sometimes, it’s over the very long run.
Among other data from the Times Poll:
* Asked what it would take to cause them to sell out of stocks entirely, 79% of those who now own stocks or funds said they would “never’ leave the market entirely, for any reason.
* Of those investors who have previously been in the market, but have sold in recent years, the largest percentage (31%) said they sold simply because they “needed the money.”
Just 8% said they sold because they had “lost money” on their investment. Other reasons for selling included “college expenses” and “lost interest.”
* Asked for their opinion as to whether “day trading”--rapid-fire, intraday trading of stocks--has a positive or negative impact on the market overall, 11% of respondents who own stocks said the impact was positive, 38% said it was negative, 33% said it was neither and 18% didn’t know.
* Twelve percent of respondents who own stocks have an online brokerage account. Of those who have online accounts, 45% said they had placed a trade in the last month, and 85% had placed a trade in the last six months.
Of investors who said they did not have an online account, 18% said they are likely to get one within the next year. But the rest said they are unlikely to do so.
* Asked about Microsoft Corp., 56% of respondents who own stocks said they disagreed with the government’s order that the company should be broken up for antitrust violations. Twenty-six percent agreed with the government, while 18% said they didn’t know.
A total of 31% said they believed that the government’s decision, announced in early April, was a “major factor” in the Nasdaq market’s plunge in that period. Twenty-six percent said it was a “minor factor,” while 27% said it wasn’t a factor, and 16% didn’t know.
* MAIN STORY: A1
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Confidence in Stocks Stays High . . .
Responses by those who own stocks to the question, “Generally speaking, over the next 12 months do you have a great deal of confidence in the stock market, a lot of confidence, not much, or no confidence at all?”
*
Great deal: 13%
A lot: 52
Not much: 28
None: 2
Don’t know: 5
*
. . . And Few Worry About the Market’s Recent Gyrations . . .
How stock investors responded to the question, “Do you think what’s been happening in the stock market lately will have a good or bad effect on your personal finances over the next 12 months, or no effect?”
*
Very good/ fairly good effect: 21%
No effect: 60
Fairly bad/very bad effect: 14
Don’t know: 5
*
. . . Even Though More Than One-Third Are Recent Investors
When stock investors were asked, “How long have you owned stocks or stock mutual funds?” 3 % said they’ve been in the market five years or less.
*
Six months or less: 4%
Seven months to one year: 3
One year to five years: 28
More than five years: 62
Don’t know: 3
*
401(k) Stock Investors: Sitting Tight
Few investors who own stock in their 401(k) retirement plans have made changes recently in how their money is invested. Of those who have made changes, those who have increased their risk level in the plans are about the same as those who have reduced risk levels. Asked whether and how they’ve changed their 401(k) investments recently, respondents said:
*
No change: 90%
Reduced risk: 4%
Increased risk: 5%
Don’t know: 1%
*
Few Investors Are Buying Stocks on Credit
Although the dollar value of stock purchases made on credit has soared in recent months, few individual investors have gone that route. Response by stock owners to the question, “In the past year, have you bought stock on credit, meaning on loan from a broker, with a home equity loan or with some other type of loan?”
*
No: 97%
Yes: 3%
*
The Wealth Effect: A Split Picture
The percentage of stock investors who feel more financially insecure when their stocks decline in value is less than those who feel more financially secure when their stocks rise in value.
*
When your stocks or stock funds are doing worse, do you feel more financially insecure, or no different?
No different: 75%
Much more/somewhat more insecure: 23%
Don’t Know: 2%
*
When your stocks or stock funds are doing better, do you feel more financially secure, or no different?
No different: 64%
Much more/somewhat more insecure: 34%
Don’t Know: 2%
