Investor Optimism Soars in October on Heels of U.S. Military Action In Afghanistan, According to UBS PaineWebber Index
- Investors Say U.S. Economy Can Recover as Nation Fights War on Terrorism -
NEW YORK, Oct. 22 /PRNewswire/ -- Optimism rebounded in October to its
highest level since March 2001, as investors expressed renewed confidence in
the economy and the Federal Government's policies, according to the Index of
Investor Optimism(R), a joint effort of UBS PaineWebber and the Gallup
Organization.
Currently at 130, the overall Index increased 67 points in October from
63 last month. Conducted monthly, the Index had a baseline of 100 when it was
established five years ago in October 1996.
The increase in optimism was most pronounced among substantial investors,
those with more than $100,000 in investable assets, and women. Optimism
soared 79 points to 156 among substantial investors compared with an increase
of 60 points to 115 among average investors, those with $10,000 or more in
investable assets. Among women, optimism jumped 72 points to 103 this month,
compared with a 62 point increase to 159 among men.
Expectations for short-term return, over the next 12 months, rose modestly
to 8.6 percent in October from 7.9 percent last month, however this increase
was reported across all investor age and experience levels. Moreover, nearly
three-quarters of investors, 73 percent, say now is a good time to invest in
the markets, an increase of 20 percentage points from last month.
Approval for the Federal Reserve reached an all-time high in October, in
the wake of aggressive interest rate cuts following the September 11 attacks.
Among those who report having an opinion about the Federal Reserve's policies,
89 percent say they approve of the Fed, and a majority of this group express
strong support. Importantly, nearly half of all investors, 45 percent, say
they are optimistic about the prospects for economic growth over the next
twelve months, up from 38 percent in September.
For the first time in three years, more investors believe the stock market
is undervalued, with 28 percent reporting this view, compared with 17 percent
who say it is overvalued. In fact, 71 percent of those surveyed say the
market will be higher one year from now, increasing from 57 percent last
month. Notably, 80 percent of substantial investors share this opinion,
compared with 66 percent of average investors.
"Broadly speaking, the surge in optimism suggests that investors are
supportive of the Administration's policies and the strong actions by the
Federal Reserve to stimulate the economy," said Mary C. Farrell, UBS
PaineWebber senior investment strategist. "While the nation's economic
recovery may have been postponed by recent events, investors appear confident
that short-term economic and political uncertainty will not have lasting
effects on the financial markets and the long-term outlook for the United
States."
In October, investors were polled about the state of the nation's economy
and the impact of the September 11 terrorist attacks. More than one-quarter
of those surveyed, 27 percent, believe the U.S. is currently experiencing an
economic recession, up from 8 percent in August when investors were last
surveyed on the subject. While the majority, 86 percent, agree that the
nation is in a recession or economic slowdown, 57 percent of this group say
the U.S. economy will recover within a year, compared with 41 percent just two
months ago. Indeed, 74 percent of investors are confident that the United
States can have a full economic recovery and still fight a war against
terrorism.
Investors had mixed opinions about the impact of last month's terrorists
attacks on the financial markets and the subsequent effects on their own
investments. Twenty-seven percent of those surveyed say recent events have
had very or extremely serious implications for their personal portfolios,
compared with 34 percent who believe the impact is slight or not serious at
all. Overall, 96 percent view terrorism as a global issue, and not one
exclusive to the U.S.
These findings are part of the 42nd Index of Investor Optimism, which was
conducted from October 1 to October 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 1,004 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 have 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.
UBS PaineWebber Inc., a member of the UBS financial services group,
provides investment advice and wealth management services to an affluent
client base.
Additional information about the Index of Investor Optimism
can be found on UBS PaineWebber's Web site:
ubspainewebber.com |
