MrsPR | Finance | U.S. Investor Confidence Declines to Lowest Level in More Than a Year

Individual Investors Remain Focused on Real Estate, Pharmaceuticals and Technology as Their Top Investment Picks

U.S. investor confidence has sunk to its lowest level since BetterInvesting first began measuring it 18 months ago as part of its Voice of the American Shareholder (VOAS) quarterly national poll conducted by Harris Interactive(R). The BetterInvesting Shareholder Confidence Index dropped to 5.0 in May from a high of 19.3 in January 2004.

The BetterInvesting VOAS Poll data released today, based on a survey of more than 1,000 individual investors, shows they are significantly less inclined to believe that the overall U.S. economy is headed in the right direction. Only about half (49%) of respondents feel confident about the direction of the economy. That is the lowest level to date, down from a high of 71 percent in January 2004.

The BetterInvesting Shareholder Confidence Index has steadily declined from its January 2004 high of 19.3. In May of that year, the Index dropped to 10.9 and then again to 9.3 in November. In February 2005, the Index lowered to 7.8. Now, at this all-time low, the Shareholder Confidence Index sits at 5.0.

On a scale of -100 to +100, where zero equals a neutral attitude toward the stock market, an index of 5.0 shows only trace levels of optimism tempered by serious concern about the economy's direction.

"Individual investors are concerned about international affairs, the erratic behavior of the stock market and the price of oil, among other things, and they are becoming more cautious in their outlook for the stock market in general," says Kenneth A. Janke, NAIC's BetterInvesting chairman. "However, a down market is a very good time to look for bargains, to do your homework and identify those companies with strong balance sheets and quality management, and to buy stocks with long-term benefits for your portfolio."

The overall view shareholders have about the economy and stock market is best characterized as cautious.

-- Less than half of all shareholders (45%) believe now is a good time
for new investors to get involved in the stock market, down from 50
percent in February 2005 and a high of 62 percent in January 2004.
-- More than half (54%) of shareholders feel that oil prices will
continue to rise, most commonly mentioning international politics as
the reason (32%).
-- Investors increasingly agree that now is a good time to move money
into safer, lower risk investments, with 47 percent now holding this
view, (versus 34% in January 2004)
-- The BetterInvesting Shareholder Confidence Index also shows men (+8.6)
are more confident than women (-0.4).
-- Investor confidence also declines with age. For those 65 and older,
the index is at -4.9.

Despite lower confidence levels and concerns about the economy, the majority of shareholders think the market will stay the same (43%) or improve (36%) in the second half of 2005. Only one in five (21%) thinks the market will worsen, while men (42%) are more likely to be optimistic than women (26%), believing the market will improve.

At mid-year, despite their concerns about the economy in general, individual investors remain focused on real estate, with 39 percent seeing this industry as the best investment. The pharmaceutical (38%) and technology (35%) industries round out the top three again.

When asked about the worst industries in which to invest for the remainder of 2005, the automotive (40%) industry made the top of the list, jumping 19 percentage points from the November VOAS survey - a significant increase and the most movement of any of the 18 industries covered.

Rounding out the top three worst investments for the second half of 2005 are the travel (26%) and education (25%) industries. Travel was seen as the worst industry to invest in according to the November 2004 VOAS results.

BetterInvesting is the world's largest nonprofit organization focused on investor education. BetterInvesting sponsors the quarterly Voice of the American Shareholder Poll and BetterInvesting Shareholder Confidence Index. Both were introduced in 2003. The VOAS poll is designed to track investing behavior and provide insights into individual shareholders' attitudes and views on current topics that could affect their investment decisions.

CONTACT: Michael Gross, Anne Klein & Associates, Inc., +1-856-988-6560
ext. 16, mike@mail.akleinpr.com; or Michael Lipman, Lipman Public Relations,
+1-212-838-2844, mikellipman@aol.com