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Bears Mostly Absent as Poll Respondents Express Optimism


What will it take to make individual investors downbeat about stocks? More than what's been thrown at them so far, apparently.

A new national Times Poll indicates that nearly 65% of Americans who already own stocks say they have "a great deal" or "a lot" of confidence in the stock market over the next 12 months, even as interest rates continue to rise and many market sectors remain far below their highs.

Moreover, only 14% of current stock investors believe the market's recent gyrations will have a "fairly bad" or "very bad" effect on their finances over the next 12 months.

The poll of 1,502, done by phone last Thursday through Sunday, found that about half of those surveyed own stocks or stock mutual funds. That matches other recent surveys that suggest about half of U.S. households own stock, up from about 20% in the late-1980s.

The charts on this page reflect only the responses of those who are currently in the market.

As in many other surveys, the vast majority of investors in the Times poll insist they're in stocks for the long haul: 91% said they are long-term investors, while just 3% said they are "in and out" of the market.

Many Wall Street pros who are bearish on stocks say that even "long-term" investors may change their views if the stock market's slump becomes prolonged, or more severe.

The Times Poll confirms that many investors are newcomers, and weren't in stocks for the last significant bear market, in 1990.

About 35% of respondents who own stocks (including mutual funds) said they've been in the market for five years or less. Twenty-seven percent have been in for six to 10 years, and 35% for more than 11 years.

The powerful bull market of the last few years has clearly boosted long-term optimism. Of those who own stocks, 25% said they have more confidence in the stock market over the long term than they did three years ago.

About 65% said they have the same level of long-term confidence that they had three years ago. Only 6% said they have less confidence.

Another question asked in the poll suggests that the Federal Reserve's hopes that weaker stock prices might reduce financial confidence--and help slow the economy--aren't going to be fulfilled, at least based on what people say right now.

Fully 75% of respondents who own stocks said they don't feel more financially insecure when their stocks are doing worse. Only 23% said they do feel more insecure.

On the flip side, 34% of respondents said they do feel more secure about their finances when their stocks are doing better.

In other words, good news from the market registers more strongly in terms of general financial confidence than does bad news, the poll suggests.

Are investors far too sanguine, considering the threat of higher interest rates and the pasting many stocks have taken over the last two months?

That's what the market's pessimists argue. But many investors note that they have history on their side: Over the long run, the market has always come back--though sometimes, it's over the very long run.

Among other data from the Times Poll:

* Asked what it would take to cause them to sell out of stocks entirely, 79% of those who now own stocks or funds said they would "never' leave the market entirely, for any reason.

* Of those investors who have previously been in the market, but have sold in recent years, the largest percentage (31%) said they sold simply because they "needed the money."

Just 8% said they sold because they had "lost money" on their investment. Other reasons for selling included "college expenses" and "lost interest."

* Asked for their opinion as to whether "day trading"--rapid-fire, intraday trading of stocks--has a positive or negative impact on the market overall, 11% of respondents who own stocks said the impact was positive, 38% said it was negative, 33% said it was neither and 18% didn't know.

* Twelve percent of respondents who own stocks have an online brokerage account. Of those who have online accounts, 45% said they had placed a trade in the last month, and 85% had placed a trade in the last six months.

Of investors who said they did not have an online account, 18% said they are likely to get one within the next year. But the rest said they are unlikely to do so.

* Asked about Microsoft Corp., 56% of respondents who own stocks said they disagreed with the government's order that the company should be broken up for antitrust violations. Twenty-six percent agreed with the government, while 18% said they didn't know.

A total of 31% said they believed that the government's decision, announced in early April, was a "major factor" in the Nasdaq market's plunge in that period. Twenty-six percent said it was a "minor factor," while 27% said it wasn't a factor, and 16% didn't know.



Confidence in Stocks Stays High . . .

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