57% polled say no Dow 9000 by year's end
NEW YORK (CBS.MW) -- Even though they remain bullish in the long run, almost two-thirds of investors believe U.S. stock markets haven't hit bottom yet, according to a new CBS MarketWatch/CBS News national investor poll.
Battered by the bear market, 45 percent of investors say their retirement portfolio has lost more than a fifth of its value in the last two years, and 18 percent say they're down a third or more, while only 5 percent say they've made any money.
And as Wednesday's anniversary of the Sept. 11 attacks approaches, corporate malfeasance outweighs terrorism as the top worry for investors, the poll shows. Half say the recent corporate governance and accounting scandals at companies like Enron (ENRNQ: news, chart, profile) and WorldCom (WCOEQ: news, chart, profile) have made them less likely to buy stocks, compared with 24 percent who say terrorism has made them skittish about investing.
"Putting money in the market is ridiculous," said Allan Rosenfeld of West Chester, N.Y., one of the poll respondents. "The market is phony. Those with money make money. We've always known it, but now it's coming out in black and white, with the Martha Stewarts and people like that."
Rosenfeld was one of 1,099 U.S. investors randomly contacted by phone over the weekend of Sept. 6 through 8. The results are likely accurate within three percentage points either way.
Investors are disillusioned with the stock market, to say the least.
Eighty-five percent of investors say their faith in the market has been shaken by recent events. Sixty-four percent say it's not yet time to buy stocks. Nearly 80 percent say stocks should make up less than half of their investment portfolio.
Two-thirds of investors say stocks are a risky investment, compared with 14 percent who say real estate is risky and 45 percent who think gold is a risky investment. See the full real-estate story.
Improving outlook
As ugly as investors' mood is, it is getting better. In July, at the height of worries about the corporate scandals and in the middle of one of the worst months ever on Wall Street, three-fourths of investors said the market was in bad shape. Today, "only" 55 percent say it's bad.
Investors, like other Americans, are split almost evenly in their views on the economy. Half think the economy is bad and half think it's good. Those percentages haven't changed in the year since the terror attacks, although investors were remarkably more upbeat in June of 2001, when 72 percent said the economy was good.
While most economists analyzing technical factors believe the recession ended in December or January, investors relying on their gut instincts disagree. Nearly 60 percent think the economy is still in a recession, and another 17 percent think we're heading into one. Just 20 percent say the recession is over.
Most of those who think the economy is in poor shape say President Bush is partially to blame. Among those who believe the economy is still in a recession, 55 percent say Bush is not handling the economy well. However, two-thirds of those who say the economy is not in a recession approve of his handling of the economy.
Despite their gloomy view of the economy, few investors believe the market will make another major move lower this year.
Only 7 percent are forecasting that the Dow Jones Industrial Average ($INDU: news, chart, profile ) will close below 7,000 at the end of the year. (It closed at 8,519 on Monday.) Fifty percent see the Dow ending the year between 7,000 and 9,000, while 32 percent see modest gains that would push the Dow above 9,000 by the end of the year.
Two-thirds think the market will rise a little in the next 12 months, while just one-sixth expect the market to be lower a year from now.
Similarly, investors think the economy is getting better slowly. Half of investors think the economy will improve in the next year, with a third saying things will stay the same. About one in ten think the economy will get worse.
Despite their foul assessment of the current state of the economy, investors remain upbeat about the market over the next two years.
Fifty-six percent of investors said the Dow would reach 10,000 again with the next two years, a gain of nearly 19 percent.
"Eventually it'll come back. I have no doubt," said Arlene L. Harris of Georgia, another respondent.
"The news media has been a big part of it," Harris said. "It scares people." She said it was "stupid" to cast blanket accusations over all companies just because a few engaged in "distressful" behavior.
Harris is among the 26 percent who believe it's a good time to buy stocks. She said she's kept her portfolio fully invested in mutual funds by reallocating some of her assets out of stocks into safer investments like bonds.
Most investors are doing just what Harris did. About half say they altered their investment approach by buying more conservative stocks or shifting to bonds, money market accounts and cash.
The vast majority of investors remain committed to a buy-and-hold philosophy. Only 12 percent believe in trying to time the market by buying and selling in reaction to market swings.
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