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Investor Optimism declines in October, according to UBS Index
Investor Optimism rises slightly in November; first increase in four months
NEW YORK, November 22, 2004 - Optimism increased for the first time in four months after investors expressed slightly more confidence in the economy, according to the UBS Index of Investor Optimism, a joint effort of UBS and the Gallup Organization.
Currently at 69, the overall Index rose 7 points this month, up from 62 in October, reaching its highest levels since June 2004. Conducted monthly, the index had a baseline of 124 when it was established in 1996.
The increase can be attributed to a 6-point increase in the Index's economic dimension, which measures investors' sentiment on economic growth, unemployment, stock market performance and inflation, all of which scored higher this month. It also is driven by a 1-point increase in the Index's personal dimension, which measures investors' confidence in their ability to reach investment targets and maintain income. Of those surveyed:
- 55 percent expressed confidence in their ability to reach investment targets during the next 12 months, up 1 percentage point from last month and down 6 from a year ago.
- 65 percent report they are optimistic that they'll achieve investment targets during the next five years, up 2 from last month and down 5 from a year ago.
- 60 percent say they are optimistic in their ability to maintain income during the next 12 months, down 4 from last month and down 4 from a year ago.
- 43 percent are optimistic about unemployment, unchanged from last month and from a year ago.
- 55 percent say they are confident in the prospects for economic growth in the next 12 months, up 4 from last month and down 2 from a year ago.
- 55 percent report they are optimistic about the stock market's performance, up 8 from last month and down 4 from a year ago.
- 40 percent are optimistic about inflation, down 1 from last month and down 4 from a year ago.
For the first time in eight months, the number of investors who believe now is a good time to invest in the financial markets rose, with 60 percent expressing this opinion. Average expectations for return during the next 12 months also increased to 10.5 from 9.8 percent in October.
According to the Index, 55 percent consider the economy to be in either a sustained expansion or recovery, compared with 53 percent last month. Conversely, 43 percent believe the economy is either in a slowdown or recession, compared with 45 percent last month. Of those who characterize the economy as being in a slowdown or recession, 71 percent say a recovery won't happen for at least 2 years. This represents a significant increase from last month when 53 percent of such investors expected a two-year wait for recovery.
This month investors were asked about factors affecting the investment climate. The majority, 62 percent, cites energy costs as hurting the markets more then any other issue. The second most important factor, according to 57 percent of those asked, is the outsourcing of jobs to foreign countries.
In addition, investors were polled about the effect the presidential election had on the U.S investment climate. Almost half of the investors believe the re-election of Bush is positive overall for the U.S. investment climate, while only 25 percent believe his re-election is negative. Similarly, 47 percent of investors say the economy will be positively affected by the election results as opposed to 35 percent who report it will be negatively affected.
Interestingly, when asked whether Bush's re-election would have a positive or negative impact on various social and economic issues the results were different. The majority of investors reported that the election results would negatively affect the issue of questionable accounting practices, threat of terrorist attacks, the current situation in Iraq and the federal budget deficit. In addition investors said energy costs and the outsourcing of jobs to foreign countries would be negatively impacted.
These findings are part of the 79th Index of Investor Optimism, which was conducted 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 801 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 in savings and investments. The sampling error in the results is plus or minus four 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 is one of the world's financial services firms. In the United States, it is the third largest private client business with a client base of more than 2 million investors. UBS's client and financial advisors provide a comprehensive range of services customized for wealthy individuals, ranging from asset management to estate planning and from corporate finance to art banking. Its American network of financial advisors manages roughly 634 billion Swiss francs in invested assets and provides sophisticated services through consultative relationships with affluent and high net worth clients. In Switzerland and internationally, UBS has more than 140 years of private banking experience, an extensive global network of 164 offices and nearly 701 billion Swiss francs in invested assets.
Additional information about the Index of Investor Optimism can be found at
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