GALLUP NEWS SERVICE
Princeton, NJ -- Investor optimism showed essentially no change this past month, now at 140 on the Investor Optimism Index, compared with 141 last month. In January and February of this year, it was in the 180 range. After falling almost 30 points in March, the Index has fluctuated between 140 and 154 for the past five months. Conducted monthly, the Index had a baseline of 100 when it was established in October 1996.
| Overall | Personal | Economic | Governmental | |
|---|---|---|---|---|
| '00 July | 140 | 111 | 46 | -17 |
| '00 June | 141 | 114 | 44 | -17 |
| '00 May | 154 | 114 | 50 | -10 |
| '00 April | 141 | 108 | 44 | -11 |
| '00 March | 151 | 109 | 51 | -9 |
| '00 February | 178 | 113 | 67 | -2 |
| '00 January | 181 | 114 | 75 | -8 |
| '99 December | 167 | 116 | 74 | -23 |
| '99 November | 132 | 103 | 55 | -26 |
| '99 October | 130 | 103 | 49 | -22 |
| '99 September | 144 | 112 | 57 | -25 |
| '99 August | 145 | 110 | 51 | -16 |
| '99 July | 171 | 115 | 65 | -9 |
| '99 June | 131 | 100 | 59 | -28 |
| '99 May | 156 | 110 | 68 | -22 |
| '99 April | 165 | 114 | 71 | -20 |
| '99 March | 145 | 108 | 57 | -20 |
| '99 February | 184 | 110 | 76 | -2 |
| '98 December | 147 | 108 | 56 | -17 |
| '98 September | 158 | 104 | 63 | -9 |
| '98 June | 162 | 105 | 71 | -14 |
| '98 March | 171 | 104 | 73 | -6 |
| '97 December | 126 | 103 | 62 | -39 |
| '97 September | 141 | 101 | 62 | -22 |
| '97 June | 119 | 104 | 57 | -42 |
| '97 February | 87 | 97 | 43 | -53 |
| '96 November | 95 | 99 | 40 | -44 |
| '96 October | 100 | 95 | 41 | -36 |
Consistent with this steadiness in theIndex, investors remain bullish about the market both in the short and long term. Almost half of all investors -- 48% -- project the market to be higher a year from now, while just 10% say it will be lower, and another 39% expect it to be about the same. Looking at the market over the nextthreemonths, investors also express more positive than negative views: 26% expect the market to rise, while just 14% expect it to decline, and the rest expect no real change. These long and short-term views are essentially the same as those expressed over the past four months. Also, similar to investors' responses over the past five months, 73% say now is a good time to invest in the financial markets.
Other evidence that investors maintain a sanguine view of the current financial situation is that only 26% say they have made any trades in the past three months, and just 15% in the past month. Only 6% of all investors have made any trades in the past quarter because of the volatility in the stock market. When asked how to characterize the current financial situation, 29% say it is a good buying opportunity, while just 3% say it is a time to sell. The rest take a wait-and-see attitude.
Investors are now less likely than they were last month and the month before to say the Federal Reserve interest rate policy will be to increase interest rates. From February through May, at least six in ten investors predicted the Fed to continue with that policy, but last month only 46% said they expected the policy to continue, while just 35% hold that view this month. By contrast, the number who expect the Fed to hold interest rates steady has increased from 17% two months ago, to 34% last month, and is now at 43%.
Investors More Cautious About Internet Stocks
In the wake of recent volatility in the NASDAQ, investors have
become more cautious about Internet stocks, although they still see
these investments as yielding higher returns than investments in
traditional stocks. Investors' perceptions of the risk of Internet
stocks are up slightly, while expectations of return are down.
Investors have always recognized that investments in Internet stocks are more risky than investments in traditional stocks, and the trend over the past year and a half has been a modest increase in this perception. Today, 74% of all investors say that investment in Internet stocks is more risky, compared with 71% who expressed that point of view last month, and 66% two months ago. In the March 1999 survey of investors, when the question of risk was first posed, 62% said Internet stocks were more risky than traditional stocks.
Investors in general have also become more sober about the level of returns that might be expected from Internet stocks, shedding some of the euphoria surrounding the spectacular gains in technology stocks in the early part of this year. Today, 48% say that the percentage returns from investing in selected Internet companies are higher than returns in other common stocks, down from 58% who felt that way in April, and 63% who felt that way last February. When the question was first asked in March 1999, only 46% said returns on Internet stocks were higher.
Internet Stocks Seen as More Volatile, and as Potentially
More Lucrative
By a margin of 65% to 7%, investors say that Internet stocks are
more rather than less volatile compared with traditional,
non-Internet stocks, while 20% say the volatility is about the same
among both types of stocks. Among those who say Internet stocks are
more volatile, 61% believe the reason for the volatility is that
the Internet industry is new and most Internet stocks are still
unproven, implying that with time volatility will decline. However,
37% of investors who say Internet stocks are more volatile also say
such stocks will continue to be volatile because the Internet
industry itself is inherently unpredictable.
Just as Internet stocks are viewed as more volatile, they are also viewed as potentially more lucrative. Overall, 42% of investors say the upside potential of a successful Internet stock is greater than the upside potential of a successful non-Internet stock, while just 16% take the opposite point of view. The rest of investors see no difference in the upside potential of the two types of stocks.
Investors in Internet Stocks Report Less Positive
Results
Generally, investors in Internet stocks have reported much higher
returns in these investments than in more traditional stocks. In
the latest survey of investors, however, just 47% say their
investments in Internet companies have been higher than average,
while 24% say performance has been lower -- a ratio of just 2-to-1.
In April, and earlier in February, the ratio was about 10-to-1,
with just over 70% each month saying their Internet investments
performed higher than average and only 7% saying lower than
average.
Internet investors recognize that many of the Internet companies that exist today will not still be operating a couple of years from now, but they generally believe that the companies they have personally chosenwillbe around. When asked to estimate the percentage of current Internet companies that will still be around in two years, only 2% saidallsuch companies would still be operating. But when asked whetherallof the Internet companies they have invested in will be around in two years, 73% of Internet investors said yes.
Still, Internet investors are about evenly divided in their approach to investing in Internet stocks. About half (51%) of these investors say that because Internet companies fail so quickly, they are extremely cautious about investing inanyInternet companies. But 45% express little concern, claiming that the high failure rate of Internet companies doesn't bother them, because they expect either to pick winners or to get out quickly if the companies they have chosen actually fail.
Survey Methods
The results reported here are based on telephone interviews with a
randomly selected national sample of 1,001 adult investors, 18
years and older, with at least $10,000 of investable assets,
conducted July 1-13, 2000. For results based on this sample, one
can say with 95 percent confidence that the maximum error
attributable to sampling and other random effects is plus or minus
3 percentage points. In addition to sampling error, question
wording and practical difficulties in conducting surveys can
introduce error or bias into the findings of public opinion
polls.
Have you ever invested in any Internet companies?
|
Yes |
No |
Don't know/ |
|
|
% |
% |
% |
|
|
'00 Jul |
23 |
76 |
1 |
|
'00 Jun |
23 |
74 |
3 |
|
'00 Apr |
30 |
69 |
1 |
|
'00 Feb |
24 |
74 |
2 |
|
'99 Sep |
21 |
77 |
2 |
|
'99 Jun |
16 |
82 |
2 |
|
'99 Mar |
15 |
82 |
3 |
No Q69
70. Are you CURRENTLY invested in one or more Internet companies? [BASED ON THOSE WHO HAVE EVER INVESTED IN INTERNET COMPANIES; N = 271; MARGIN OF ERROR = +/- 7%]
|
Yes |
No |
Don't know/ |
|
|
% |
% |
% |
|
|
'00 Jul |
81 |
18 |
1 |
|
'00 Jun |
83 |
16 |
1 |
|
'00 Apr |
84 |
13 |
3 |
|
'00 Feb |
88 |
11 |
1 |
|
'99 Sep |
79 |
19 |
2 |
|
'99 Jun |
81 |
18 |
1 |
|
'99 Mar |
88 |
11 |
1 |
Among ALL investors, 19% are currently invested in Internet stocks.
Did you invest in Internet companies as part of a long-term or a short-term strategy? [BASED ON THOSE WHO HAVE EVER INVESTED IN INTERNET COMPANIES; N = 271; MARGIN OF ERROR = +/- 7%]
|
Long-term |
Short-term |
(Mixed) |
Don't know/ |
|
|
% |
% |
% |
% |
|
|
'00 Jul |
62 |
30 |
8 |
- |
|
'00 Apr |
72 |
24 |
3 |
1 |
|
'00 Feb |
64 |
27 |
8 |
1 |
|
'99 Sep |
55 |
37 |
7 |
1 |
|
'99 Jun |
60 |
34 |
6 |
0 |
|
'99 Mar |
62 |
30 |
8 |
0 |
Compared to most investments, how well have your investments in Internet companies done? [BASED ON THOSE WHO HAVE EVER INVESTED IN INTERNET COMPANIES; N = 271; MARGIN OF ERROR = +/- 7%]
|
Much higher than average |
Somewhat higher than average |
About average |
Somewhat lower than average |
Much lower than average |
Don't know/ |
|
|
% |
% |
% |
% |
% |
% |
|
|
'00 Jul |
14 |
33 |
28 |
16 |
8 |
1 |
|
'00 Apr |
29 |
42 |
20 |
4 |
3 |
2 |
|
'00 Feb |
34 |
38 |
17 |
5 |
2 |
4 |
|
'99 Sep |
26 |
32 |
27 |
10 |
1 |
4 |
|
'99 Jun |
36 |
35 |
19 |
6 |
3 |
1 |
|
'99 Mar |
40 |
23 |
24 |
5 |
6 |
2 |
No Q73
74. Overall, compared to investing in other common stocks, do you think that investing in selected Internet companies is much more risky, somewhat risky, about the same risk, somewhat less risky, or much less risky [Read and rotate responses]?
|
Much more risky |
Somewhat more risky |
About the same risk |
Somewhat less risky |
Much less risky |
Don't know/ |
|
|
% |
% |
% |
% |
% |
% |
|
|
'00 Jul |
30 |
44 |
18 |
4 |
1 |
3 |
|
'00 Apr |
28 |
43 |
19 |
6 |
1 |
3 |
|
'00 Feb |
31 |
35 |
22 |
6 |
1 |
5 |
|
'99 Sep |
25 |
40 |
24 |
7 |
2 |
2 |
|
'99 Jun |
27 |
37 |
23 |
6 |
2 |
5 |
|
'99 Mar |
25 |
37 |
23 |
8 |
1 |
6 |
Again, compared to the return one can get from investing in other common stocks, do you think that the PERCENTAGE RETURN from investing in selected Internet companies is much higher, somewhat higher, about the same, somewhat lower, or much lower [Read and rotate responses]?
|
Much higher |
Somewhat higher |
About |
Somewhat lower |
Much |
Don't know/ |
|
|
% |
% |
% |
% |
% |
% |
|
|
'00 Jul |
14 |
34 |
28 |
11 |
4 |
9 |
|
'00 Apr |
21 |
37 |
26 |
9 |
2 |
5 |
|
'00 Feb |
24 |
39 |
22 |
4 |
2 |
9 |
|
'99 Sep |
14 |
36 |
31 |
9 |
2 |
8 |
|
'99 Jun |
18 |
32 |
29 |
10 |
1 |
10 |
|
'99 Mar |
16 |
30 |
30 |
10 |
3 |
11 |
Approximately what percentage of your portfolio is invested in Internet stocks? [BASED ON THOSE WHO ARE CURRENTLY INVESTED IN ONE OR MORE INTERNET COMPANIES; N = 228 ; MARGIN OF ERROR = +/- 7 PCT. PTS.]
|
0-4% |
5-9 |
10- 14% |
15-19% |
20-24% |
25-29% |
30% or more |
Don't know/ |
MEAN |
|
|
% |
% |
% |
% |
% |
% |
% |
% |
% |
|
|
'00 Jul |
12 |
14 |
17 |
8 |
13 |
3 |
24 |
9 |
20.9 |
|
'00 Jun |
8 |
25 |
17 |
3 |
13 |
7 |
20 |
6 |
20.6 |
|
'00 Apr |
6 |
11 |
19 |
11 |
15 |
10 |
21 |
8 |
20.9 |
|
'00 Feb |
9 |
18 |
15 |
11 |
10 |
7 |
23 |
7 |
21.8 |
|
'99 Sep |
12 |
16 |
21 |
8 |
8 |
7 |
15 |
13 |
17.3 |
|
'99 Jun |
12 |
12 |
16 |
10 |
12 |
10 |
18 |
10 |
19.5 |
|
'99 Mar |
12 |
18 |
19 |
5 |
9 |
7 |
17 |
13 |
18.9 |
In general, do you think that Internet stocks are more volatile than traditional, non-Internet stocks, about the same, or less volatile?
|
Internet stocks more volatile |
About the same |
Less volatile |
Don't know/ |
|
|
'00 Jul |
65% |
20 |
7 |
8 |
How much more volatile? [BASED ON THOSE WHO SAID INTERNET STOCKS ARE MORE VOLATILE; N=726; MARGIN OF ERROR = +/- 4 PCT. PTS.]
|
A little more volatile |
Moderately more volatile |
Much more volatile |
Extremely more volatile |
Don't know/ |
|
|
'00 Jul |
12% |
33 |
39 |
16 |
- |
Which comes closest to your view about why Internet stocks are volatile? 1) Internet stocks are volatile now, because the Internet industry is new, and most Internet companies are still unproven or 2) Internet stocks are volatile now, and will continue to be volatile, because the Internet industry itself is inherently unpredictable [ROTATE 1-2]? [BASED ON THOSE WHO SAID INTERNET STOCKS ARE MORE VOLATILE; N=726; MARGIN OF ERROR = +/- 4 PCT. PTS.]
|
Industry is new, most Internet companies still unproven |
Will continue to be volatile, because Internet industry itself is inherently unpredictable |
Don't know/ |
|
|
'00 Jul |
61% |
37 |
2 |
Do you think the upside potential of a SUCCESSFUL Internet stock is greater, about the same, or lower than the upside potential of a SUCCESSFUL non-Internet stock?
|
Internet stock upside potential is greater |
Upside potential about the same |
Upside potential is lower |
Don't know/ |
|
|
'00 Jul |
42% |
34 |
16 |
8 |
How much greater is the upside potential of an Internet stock? [BASED ON THOSE WHO THINK INTERNET STOCK UPSIDE POTENTIAL IS GREATER; N = 454; MARGIN OF ERROR = +/- 5 PCT. PTS.]
|
A little greater |
Moderately greater |
Much greater |
Unlimited |
Don't know/ |
|
|
'00 Jul |
12% |
39 |
36 |
12 |
1 |
About what percentage of Internet companies that exist today do you think will still be operating two years from now? [Open ended and code actual percent] [BASED ON THOSE WHO ARE CURRENTLY INVESTED IN ONE OR MORE INTERNET COMPANIES; N =228; MARGIN OF ERROR = +/- 7 PCT. PTS.]
|
0-24% |
25-49% |
50-60% |
61% or more |
Mean |
Median |
|
|
'00 Jul |
26% |
23 |
39 |
12 |
40.7 |
50.0 |
Do you think that all the Internet companies you personally are currently invested in will be around two years from now, or not? [BASED ON THOSE WHO ARE CURRENTLY INVESTED IN ONE OR MORE INTERNET COMPANIES; N = 228; MARGIN OF ERROR = +/- 7 PCT. PTS.]
|
Yes |
No |
Don't know/ |
|
|
'00 Jul |
73% |
22 |
- |
Which comes closer to your point of view about investing in Internet stocks? 1) The fact that many Internet companies fail so quickly doesn't bother you, because you expect either to pick winners or get out quickly if they fail or 2) Because many Internet companies fail so quickly, you are extremely cautious about investing in ANY Internet companies [ROTATE 1-2] {BASED ON THOSE WHO ARE CURRENTLY INVESTED IN ONE OR MORE INTERNETCOMPANIES; N = 228; MARGIN OF ERROR = +/- 7 PCT. PTS.}
|
Doesn't bother you because you expect to pick winners or get out quickly if they fail |
B/C many Internet companies fail so quickly, you are extremely cautious about investing in ANY internet companies |
Don't know/ |
|
|
'00 Jul |
45% |
51 |
4 |
