Survey: More Investors Turn Bearish
21 Percent Are Pessimistic, 45 Percent Are Bullish
Reuters
NEW YORK (Oct. 19) - A growing minority of U.S. individual investors is turning bearish on the stock market because of rising interest rates and gyrating share prices, according to a survey released Monday.
Some 21 percent of investors are pessimistic on the U.S. stock market's outlook, the highest percentage since March 1997, according to a quarterly survey of 500 investors by brokerage firm Quick & Reilly. Some 45 percent of investors polled between Sept. 21-24 remained bullish, down from 59 percent in May when the unit of Boston bank Fleet Financial, last conducted the survey.
Individual investor surveys in recent years have proven a better market indicator than they used to be because investors are more knowledgeable and active in financial markets.
Savvy traders previously used retail investor sentiment as a contrarian indicator, because these investors always seemed to buy at the stock market's top and sell at the low.
''The old school of thought was when the retail investor was in the game, it was an indication that the end of the bull market cycle was fast approaching,'' said Quick & Reilly's president, Tom Quick, in a telephone interview. ''That really hasn't been the case for some time: You have never had a group of people that are more connected, more involved in the markets than we have had in the last 10 years.''
The Internet and cheap computers have enabled individual investors to research companies, invest wisely and plan their own financial future, Quick said.
Quick & Reilly attributed the rising bearish sentiment to the stock market's recent decline, although the main averages are still up for the year. Rising interest rates and fear of inflation have led to big price swings in individual stocks and the broader market on the last few months.
The Dow Jones Industrial Average has dropped more than 10 percent from its August high of 11,326, a drop known on Wall Street as a ''correction.'' The Dow Monday dipped below the psychologically important level of 10,000, but closed up 96.6 points at 10,116 helped by rising bank shares on strong earnings.
Some 31 percent of investors surveyed said they had changed their stock market outlook markedly in the last six month. Of this group, almost three-quarter was now more pessimistic than six months ago, according to the survey.
Still, Quick did not expect any individual investors to dump their share. Investors have learned to sit tight during downturns and a majority is still bullish, he said.
The survey also polled investors on stock trading beyond the close of regular New York markets. Many brokerage firms recently have rushed to offer the service, citing investor demand.
But the survey found just 48 percent of investors interested in trading after hours. Of this group, some 60 percent worried that the after-hours market may not attract enough buyers and sellers. |
