Rich US investors most bearish ever: survey

Reuters
Rich U.S. investors most bearish ever: survey
Wed Dec 3, 2008 8:14am EST

NEW YORK (Reuters) - U.S. millionaires' investment outlook became the gloomiest on record last month thanks to the deteriorating economy and plunging stock prices, a survey said on Wednesday.

Spectrem Group said its Millionaire Investor Index fell for a fourth straight month to enter so-called bearish territory for the first time ever. The index fell to minus 39, dropping a record 15 points from October, including a 6-point fall in just the last week of November.

A companion survey, Spectrem's Affluent Investor Index, which measures the investment outlook of households with at least $500,000 in investable assets, also slid to a new low, dropping 9 points to minus 39.

Any reading below minus 31 represents bearish territory.

"The affluent are feeling the pull of the holidays approaching and year-end bonuses being slashed across all industries, on top of record unemployment and plummeting housing values," the Spectrem report said. The bailout of Citigroup (C.N: Quote, Profile, Research, Stock Buzz) and "the very public machinations of the auto industry to get federal help did little to bolster the confidence of the affluent investors."

In response to an open-ended question, 48 percent of respondents to the millionaire survey cited the economy as the factor most affecting their outlook. In the affluent survey, 42 percent listed the economy, up sharply from the 12 percent who cited the economy as having the biggest impact on their view in August, the last time the question was posed.

It was a month of harsh news for the U.S. economy, starting with government data showing that non-farm payrolls fell for a 10 straight month in October and that the unemployment rate shot to 6.5 percent, its highest level since 1994. Consumer sentiment is also in the dumps, while third-quarter U.S. gross domestic product contracted more than originally reported. Just this week, the U.S. was declared officially in recession.

Investors were also fretful over the stock market, which fell for a third straight month in November. Over that period the Dow Jones industrial average .DJI has more fallen than 30 percent while the Nasdaq .IXIC has shed 42 percent. About 21 percent of respondents in the millionaire survey cited stock market conditions as the biggest impact on their outlook.

Spectrem said affluent investors were moving away from traditional investment vehicles, with the amount of investing in bond mutual funds and real estate both reaching record lows in November. More investors were either not investing at all, the report read, or increasing cash investments in an attempt to avoid a volatile market.

"It is difficult to see the affluent jumping back into traditional investment vehicles with any enthusiasm until the economy stabilizes and every week doesn't being new news of bank bailouts and failing industries," it said.

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