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U.S. Investors Say It's Time to Buy Stocks; Favor Asia, Energy
By Rich Miller
May 15 (Bloomberg) -- Close to half of affluent U.S. investors see the stock market as a buy, with energy as the industry and Asia as the region to be in.
The annual Bloomberg/Los Angeles Times poll of investors found that 44 percent of those with household incomes of $100,000 or more viewed it as a good time to buy stocks, versus 15 percent who said it isn't. The benchmark Standard & Poor's 500 index has declined 10 percent from its record high in October.
``Any time prices come down, that's typically been the time to buy,'' said Phyllis Hamm, 59, a survey participant who works at a nonprofit group in Raleigh, North Carolina.
The poll results signal some Americans may be ready to shift part of the $3.5 trillion parked in money market funds into equities. The confidence also indicates they anticipate limited spillover among stocks from the financial crisis that has led to $335 billion of losses and writedowns in that industry.
``There's plenty of ammunition out there for an equity rally later this year,'' said Joseph Quinlan, chief market strategist in New York for the investment-management unit of Bank of America Corp., which oversees $643 billion in client assets.
Forty percent of respondents singled out energy as the best place to put their money over the next 12 months, followed by health care and drugs, at 30 percent, technology, at 22 percent, and financial services, with 15 percent. Investors could choose more than one industry.
Contrast With 2007
Only 4 percent of investors surveyed last year said financial services was the best place to invest. Health care came in first in 2007, followed by energy and technology.
``If you're a contrarian, financial services might be the sector with the opportunities,'' said Paul Engle, a 57-year-old consultant in Clarksville, Maryland. ``I don't believe large financial institutions are in any risk of going out of business.''
Financial stocks have been hammered by the credit crunch that was sparked by rising defaults on subprime mortgages. The S&P 500 financial index has lost about 30 percent in the past year, to 351.26.
Asia came out on top when well-off investors were asked which region offers the best returns over the next 12 months -- the same result as in last year's poll. The U.S. slipped from second to third, slightly lagging behind emerging markets.
``International stocks may be more reliable investments than those here, as reflected by the weakness of the dollar,'' said Lesia Dropulic, a 45-year-old doctor in Ellicott City, Maryland.
Currency Impact
Asian currencies have soared against the dollar in recent years, fueled by rising trade surpluses and investments from abroad. China's yuan has advanced 18 percent in the past three years, Singapore's dollar is up 21 percent and the Thai baht has gained 23 percent. The dollar has slumped 18 percent versus the euro over that period.
The poll of 2,208 adults nationwide included 607 investors with household incomes of at least $100,000 and was conducted May 1 to May 8. The group has a margin of sampling error of plus or minus 4 percentage points.
While investors said it's a good time to buy stocks, the survey also indicated that they have become more guarded about allocating their own funds. Twenty-nine percent of those surveyed described themselves as aggressive, pro-growth investors, down from 36 percent last year.
Given a hypothetical $1 million to invest, the investors chose mutual funds as the best place to put their money, replacing real estate, which held the top spot in last year's poll. Stocks came in third both years.
Asset Diversification
``You need to be diversified,'' said Scotty Reiss, a 44- year-old, stay-at-home mother in Cos Cob, Connecticut. ``You can't put all your eggs in one basket.''
While 96 percent of affluent investors described themselves as financially secure, others who took part in the poll were not as confident. Overall, 57 percent said they were secure -- down from 68 percent last year and the lowest level since 1992.
The well-off, though, scaled back their financial expectations. Nearly half anticipated that their investments will earn less this year than last. That compares with 28 percent in the 2007 poll.
One-third expected the value of their homes to stagnate or fall over the next three years. That's also a turnaround from last year, when only 4 percent were so pessimistic.
``There's a lot of sobriety out there,'' says Robert Stovall, managing director and global strategist for Wood Asset Management Inc., which runs more than $1 billion in investments for its clients. ``It's probably a pretty good time to buy shares.''
To contact the reporter on this story: Rich Miller in Washington at rmiller28@bloomberg.net.
By Rich Miller
May 15 (Bloomberg) -- Close to half of affluent U.S. investors see the stock market as a buy, with energy as the industry and Asia as the region to be in.
The annual Bloomberg/Los Angeles Times poll of investors found that 44 percent of those with household incomes of $100,000 or more viewed it as a good time to buy stocks, versus 15 percent who said it isn't. The benchmark Standard & Poor's 500 index has declined 10 percent from its record high in October.
``Any time prices come down, that's typically been the time to buy,'' said Phyllis Hamm, 59, a survey participant who works at a nonprofit group in Raleigh, North Carolina.
The poll results signal some Americans may be ready to shift part of the $3.5 trillion parked in money market funds into equities. The confidence also indicates they anticipate limited spillover among stocks from the financial crisis that has led to $335 billion of losses and writedowns in that industry.
``There's plenty of ammunition out there for an equity rally later this year,'' said Joseph Quinlan, chief market strategist in New York for the investment-management unit of Bank of America Corp., which oversees $643 billion in client assets.
Forty percent of respondents singled out energy as the best place to put their money over the next 12 months, followed by health care and drugs, at 30 percent, technology, at 22 percent, and financial services, with 15 percent. Investors could choose more than one industry.
Contrast With 2007
Only 4 percent of investors surveyed last year said financial services was the best place to invest. Health care came in first in 2007, followed by energy and technology.
``If you're a contrarian, financial services might be the sector with the opportunities,'' said Paul Engle, a 57-year-old consultant in Clarksville, Maryland. ``I don't believe large financial institutions are in any risk of going out of business.''
Financial stocks have been hammered by the credit crunch that was sparked by rising defaults on subprime mortgages. The S&P 500 financial index has lost about 30 percent in the past year, to 351.26.
Asia came out on top when well-off investors were asked which region offers the best returns over the next 12 months -- the same result as in last year's poll. The U.S. slipped from second to third, slightly lagging behind emerging markets.
``International stocks may be more reliable investments than those here, as reflected by the weakness of the dollar,'' said Lesia Dropulic, a 45-year-old doctor in Ellicott City, Maryland.
Currency Impact
Asian currencies have soared against the dollar in recent years, fueled by rising trade surpluses and investments from abroad. China's yuan has advanced 18 percent in the past three years, Singapore's dollar is up 21 percent and the Thai baht has gained 23 percent. The dollar has slumped 18 percent versus the euro over that period.
The poll of 2,208 adults nationwide included 607 investors with household incomes of at least $100,000 and was conducted May 1 to May 8. The group has a margin of sampling error of plus or minus 4 percentage points.
While investors said it's a good time to buy stocks, the survey also indicated that they have become more guarded about allocating their own funds. Twenty-nine percent of those surveyed described themselves as aggressive, pro-growth investors, down from 36 percent last year.
Given a hypothetical $1 million to invest, the investors chose mutual funds as the best place to put their money, replacing real estate, which held the top spot in last year's poll. Stocks came in third both years.
Asset Diversification
``You need to be diversified,'' said Scotty Reiss, a 44- year-old, stay-at-home mother in Cos Cob, Connecticut. ``You can't put all your eggs in one basket.''
While 96 percent of affluent investors described themselves as financially secure, others who took part in the poll were not as confident. Overall, 57 percent said they were secure -- down from 68 percent last year and the lowest level since 1992.
The well-off, though, scaled back their financial expectations. Nearly half anticipated that their investments will earn less this year than last. That compares with 28 percent in the 2007 poll.
One-third expected the value of their homes to stagnate or fall over the next three years. That's also a turnaround from last year, when only 4 percent were so pessimistic.
``There's a lot of sobriety out there,'' says Robert Stovall, managing director and global strategist for Wood Asset Management Inc., which runs more than $1 billion in investments for its clients. ``It's probably a pretty good time to buy shares.''
To contact the reporter on this story: Rich Miller in Washington at rmiller28@bloomberg.net.
