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Investor Optimism rises slightly in November from October's record low, according to UBS Index

| Media Releases Americas

Investors Foresee Modest Improvement in Economic Outlook But Remain Cautious About Holiday Spending

Overall optimism rose modestly in November, following a plunge to all-time lows last month, as investors expressed a slightly improved outlook for the nation's economy, according to the Index of Investor OptimismĀ®, a joint effort of UBS and the Gallup Organization.

Currently at 41, the overall Index increased 12 points from 29 in October. Conducted monthly, the Index had a baseline level of 124 when it was established in 1996.

The rise in the overall Index can be attributed to a somewhat more upbeat view about the nation's prospects for economic growth, with 43 percent of investors reporting optimism about the economy over the next 12 months, up from 38 percent in October. Moreover, when asked to describe the current state of the U.S. economy, 30 percent of investors say it is in a recovery, up from 26 percent in January, the last time investors were polled on the subject. Less than half of investors, 42 percent, say the nation is experiencing an economic slowdown, the same number who held this opinion in January, while 23 percent believe the economy is in recession, down from 29 percent at the beginning of the year.

Expectations for short-term return, over the next 12 months, increased marginally in November to 8.5 percent from 8.1 percent last month. Notably, the least experienced investors continue to have significantly higher expectations for short-term return. Those with less than five years in the financial markets expect on average a 15 percent rate of return on their portfolio in the next year, compared with 8 percent among more experienced investors, those with more than five years in the markets. Despite these healthy expectations for return, those surveyed report they earned a negative (4) percent on their investments in the past 12 months.

According to the Index, 50 percent of investors say now is a good time to invest in the markets, holding relatively steady from last month when 48 percent shared this view, the lowest level in the survey's history. At the same time, a majority of those surveyed, 58 percent, expect the stock market will be higher a year from now. Still, most investors say that they currently view bonds as a more promising investment than stocks, with 59 percent favoring bonds over stocks, up from 50 percent in May. In contrast, 29 percent view stocks as more attractive, down from 41 percent in May.

This month, investors were asked who they believe will have the greatest influence in helping to improve investor confidence. Interestingly, 25 percent of investors cite the CEOs of large corporations as playing the greatest role. This is followed by the President of the United States, 24 percent; the Chairman of the Federal Reserve, 17 percent; the U.S. Congress, 12 percent; the Chairman of the Securities Exchange Commission, 9 percent; and the Secretary of the Treasury, 3 percent.

Investors were also polled about their plans for holiday spending and their spending habits overall. On average, those surveyed report they will spend approximately $1,100 on holiday gifts this season. Nearly two-thirds of those surveyed, 63 percent, say they will spend about the same on gifts as they did last year, while 25 percent say they will spend less, and only 10 percent plan to spend more.

Similarly, 62 percent of investors say their overall level of spending will remain the same over the next six months, compared with 22 percent who report they will decrease their spending, and 16 percent who believe they will increase their overall spending level. When asked specifically about major purchases, more than one-third, 36 percent say they plan to decrease their spending in the next six months, while 16 percent report their spending will increase, and 47 percent plan to keep major purchase spending at the same level.

These findings are part of the 55th Index of Investor Optimism, which was conducted from November 1 to November 17. 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 1,000 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.

In January 2002, UBS established the Index of Investor Optimism - EU 5, the European counterpart to the U.S. survey covering France, Germany, Great Britain, Italy and Spain. This month, 1,000 investors across these EU markets were polled from November 1 to November 17. Overall optimism registered at negative (28) in October, up from negative (33) last month.

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 AG is a leading global financial services firm with 71,000 employees worldwide, providing a wide range of services to a client base that includes affluent individuals, corporations, institutions and governments. Headquartered in Switzerland, the bank has significant operations in all of the world's major financial centers and is comprised of four business groups; UBS Warburg, UBS PaineWebber, UBS Wealth Management and Business Banking, and UBS Global Asset Management.

Additional information about the Index of Investor Optimism can be found at
www.ubs.com/investoroptimism.

UBS Index of investor optimism overall trend

Overall Index

02 November

41

02 October

29

02 September

60

02 August

52

02 July

46

02 June

72

02 May

90

02 April

89

02 March

121

02 February

92

02 January

115

01 December

88

01 November

84

01 October

86

01 September

50

01 August

76

01 July

74

01 June

85

01 May

90

01 April

81

01 March

82

01 February

77

01 January

96

00 December

106

00 November

130

00 October

132

00 September

147

00 August

160

00 July

143

00 June

149

00 May

155

00 April

140

00 March

150

00 February

168

00 January

178

99 December

174

99 November

148

99 October

139

99 September

160

99 August

149

99 July

166

99 June

146

99 May

163

99 April

168

99 March

151

99 February

167

98 December

141

98 September

147

98 June

160

98 March

161

97 December

151

97 September

151

97 June

152

97 February

128

96 November

125

96 October

124