PaineWebber Index Shows Most Investors are Bullish About Financial
Markets in Next Three Months
- Many Investors Disapprove of President Clinton's Decision to Abandon Proposed Private
Retirement Accounts as Part of Social Security Reform -
NEW YORK, Nov. 22 /PRNewswire/ -- Investors are more bullish about the financial markets this month than they were in
October, despite a small increase in overall investor optimism, according to the latest Index of Investor Optimism findings. A
joint effort of PaineWebber Incorporated and the Gallup Organization, the Index shows that nearly three-quarters of investors
believe now is a good time to invest in the markets.
Currently at 132, the Index increased two points in November, from 130 in October. Conducted monthly, the Index had a
baseline of 100 when it was established in October 1996.
Seventy-three percent of investors say now is a good time to invest in the markets, compared with 64 percent in October.
Similarly, the number of investors who expect the markets to increase or stay the same in the next three months rose to 78
percent, compared with 68 percent in October.
Expectations for return in the next 12 months remained virtually unchanged, at 15.4 percent, compared with 15.7 percent in
October. The number of investors who are optimistic regarding interest rates declined to 47 percent, from 52 percent in
October.
Among investors with five years of investing experience or less, optimism declined to its lowest levels since September 1998,
falling to 111, compared with 126 in October, while their expectations for return in the next year fell to 17.8 percent, from
20.9 percent. In contrast, optimism among investors with more than 20 years of experience fell to 157, from 169 in October,
but expectations for return increased modestly, to 14.2 percent, compared with 13.5 percent.
``While the Index findings show that investors remain optimistic about the markets, they also suggest heightened sensitivity to
the potential effects of interest rate policies on short-term returns,' said Mark B. Sutton, president of PaineWebber's Private
Client Group. ``It is encouraging to see investors, particularly the least experienced investors, adjust their expectations for
return, yet it is unclear if this is a long-term trend. We must continue to help investors gain greater knowledge and historical
perspective regarding the variables that influence the markets.'
Many investors are concerned about federal interest rate policies. Overall optimism regarding rates declined modestly, to 47
percent, compared with 52 percent in October. Among the most experienced investors, optimism regarding rates fell 14
percentage points, to 48 percent from 62 percent in October. Similarly, optimism regarding rates among younger investors
declined to 40 percent, compared with 51 percent in October. (Polling for the Index was completed just before the Federal
Reserve raised rates one-quarter point, November 13.)
As part of the November Index survey, PaineWebber asked investors about their views on Social Security reform and new
financial services legislation. The Index shows that 61 percent of investors have heard of President Clinton's decision to
abandon his proposal to create private retirement accounts as part of Social Security reform. Overall, 39 percent of investors
disapprove of the President's decision, compared with 23 percent who approve; more than one-third, 37 percent, have no
opinion. Older investors were more likely (42 percent) than younger investors (32 percent) to disapprove of the President's
decision.
Overall, investors are indifferent to recent financial services industry reform. Fifty-eight percent of investors are not aware that
the President and Congress approved legal reforms. Nearly one quarter, 23 percent, say the new legislation will benefit
consumers. Thirty-six percent of investors say the reform will affect them, nearly half of whom, 45 percent, say it will be to
their benefit, while 43 percent say it will be to their detriment.
These findings are part of the 19th Index of Investor Optimism, which was conducted from November 1 to November 14. To
track and measure Index changes on an ongoing basis, new samplings are taken monthly. Dennis J. Jacobe, research director
for Gallup, said the sampling included 1,002 investors randomly selected from across the country. For this study, the American
investor is defined as any person who is head of a household or a spouse in any household with total savings and investments
of $10,000 or more. Nearly 40 percent of American households has at least this amount of savings and investments. The
sampling error in the results is plus or minus three percentage points.
For more than 60 years, the Gallup Organization has been a recognized leader in the measurement and analysis of people's
attitudes, opinions and behavior. While best known for the Gallup Poll, founded in 1935, Gallup's current activities consist
largely of providing marketing and management research, advisory services and education to the world's largest corporations
and institutions.
Paine Webber Group Inc., together with its subsidiaries, serves the investment and capital needs of a worldwide client base.
The firm employs 18,988 people in 309 offices.
Additional information about the Index of Investor Optimism can be found in the ``What's New' section of PaineWebber's
Web site: painewebber.com. |
