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Index of Investor Optimism Moves Sharply Higher in July

Index of Investor Optimism Moves Sharply Higher in July

by Dennis Jacobe and David W. Moore

GALLUP NEWS SERVICE

Investor optimism rebounded sharply in July, soaring to its highest level since February of this year, and is at its second-highest level ever. According to the latest survey of about 1,000 investors across the country, conducted for PaineWebber by The Gallup Organization, the overall Index now stands at 171, up from 131 last month. The Index was standardized at 100 when it was first instituted in October 1996. The Index reached its highest point in February 1999 when it stood at 184. The current survey was conducted from July 1-14, 1999, and includes a national sample of 1,005 investors with investable assets of at least $10,000.

INVESTOR ATTITUDES: THE INDEX

  INDEX OF INVESTOR OPTIMISM
  Overall Personal Economic Governmental
'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

In part, this surge in investor optimism may have resulted from the way the Federal Reserve Board moderated the recent rise in interest rates, reducing the credibility of those asserting the view that the board would be more aggressive toward interest rates. The strong economy and the projections of enormous federal budget surpluses in the years ahead may also have played a significant part in raising the level of investor optimism.

The survey shows that among investors, personal optimism reached a new record and now stands at 115 -- a result of the good economy and the strong markets. Governmental optimism improved to a -9, reflecting sharply reduced pessimism about the federal budget. Optimism along the economic dimension also increased to 65 from 59 a month earlier, but this leaves economic optimism at about an average level for 1999.

Investors Expect Sharply Higher Rates of Return
Investor expectations soared along with investor optimism during July. Investors now expect higher annual average rates of return over the coming months than they have at any point since the Index began measuring investor rate expectations a year ago (June '98).

On average, investors say that they got a 17.4% annual rate of return on their portfolios during the past 12 months. This is up significantly from the 16.1% investors reported in June. It is also the highest level reported since the Index began tracking investor rates of return.

Investors expect to get, on average, a 16.6% annual rate of return on their portfolios during the next 12 months. This is up significantly from the 14.9% investors said they expected in June. It is also the highest level reported since the Index began tracking investor expectations for their future rates of return.

Not surprisingly, investor expectations for the market also increased significantly. In July, investors say they expect the market to provide, on average, a 15% annual rate of return during the next 12 months. This is up significantly from the 13% investors said they expected in June. Once again, it is also the highest level reported since the Index began tracking investor expectations of future rates of return.

Investors say that the minimum acceptable annual rate of return on their portfolios during the past 12 months is 12.3%. This is up significantly from the 10.8% investors reported in June. It is also the highest level reported since the Index began tracking investor expectations a year ago.

Finally, more than three-quarters of all investors say that now is a good time to invest in the financial markets, compared with 71% who said that last month.

INDEX OF INVESTOR OPTIMISM TREND COMPARED BY GENDER OF INVESTOR AMONG TYPES OF INVESTORS

A. OVERALL INDEX


  SUBSTANTIAL INVESTORS AVERAGE INVESTORS
  Male Female Male Female
Overall Optimism Index
'99 July 213 208 171 125
'99 June 165 152 105 124
'99 May 201 159 161 122
'99 April 198 191 180 121
'99 March 161 186 144 118
'99 February 228 233 159 154
'98 December 184 170 142 113
'98 September 196 181 151 129
'98 June 201 193 156 128
'98 March 195 153 184 152
'97 December 180 140 137 71
'97 September 194 175 140 99
'97 June 150 133 143 69
'97 February 135 108 74 57
'96 November 133 116 90 64
'96 October 119 114 106 84

B. PERSONAL INDEX


  SUBSTANTIAL INVESTORS AVERAGE INVESTORS
  Male Female Male Female
Personal Optimism Index
'99 July 132 140 109 97
'99 June 125 113 87 89
'99 May 135 118 110 90
'99 April 125 128 113 102
'99 March 122 122 102 98
'99 February 138 120 98 96
'98 December 127 120 104 92
'98 September 119 116 105 88
'98 June 122 125 99 91
'98 March 129 100 103 89
'97 December 124 120 97 86
'97 September 128 115 92 89
'97 June 120 121 111 79
'97 February 122 109 83 84
'96 November 119 115 89 82
'96 October 112 119 87 86

C. ECONOMIC INDEX


  SUBSTANTIAL INVESTORS AVERAGE INVESTORS
  Male Female Male Female
Economic Optimism Index
'99 July 84 76 65 48
'99 June 55 63 64 54
'99 May 94 68 68 54
'99 April 93 70 76 51
'99 March 61 77 59 48
'99 February 91 86 71 67
'98 December 71 55 60 40
'98 September 76 67 63 51
'98 June 83 78 74 57
'98 March 74 65 90 61
'97 December 86 64 65 42
'97 September 77 61 69 47
'97 June 67 60 70 34
'97 February 58 49 50 24
'96 November 59 44 42 29
'96 October 48 32 50 34

D. GOVERNMENTAL INDEX


  SUBSTANTIAL INVESTORS AVERAGE INVESTORS
  Male Female Male Female
Governmental Optimism Index
'99 July -3 -9 -4 -20
'99 June -15 -24 -46 -18
'99 May -28 -27 -17 -22
'99 April -20 -17 -9 -32
'99 March -22 -13 -17 -25
'99 February -1 27 -10 -9
'98 December -14 -5 -22 -19
'98 September 1 -2 -17 -10
'98 June -4 -10 -17 -21
'98 March -8 -12 -9 2
'97 December -30 -44 -25 -57
'97 September -11 -1 -21 -37
'97 June -37 -48 -38 -44
'97 February -45 -50 -59 -51
'96 November -45 -43 -41 -47
'96 October -41 -37 -31 -34

INDEX OF INVESTOR OPTIMISM TREND COMPARED BY TYPE OF INVESTOR AND GENDER OF INVESTOR

A. OVERALL INDEX


  OVERALL TYPE OF INVESTORS GENDER OF INVESTORS
    Average Substantial Male Female
Overall Optimism Index
'99 July 171 148 211 187 154
'99 June 131 114 159 128 134
'99 May 156 140 183 177 134
'99 April 165 151 191 187 140
'99 March 145 130 171 152 138
'99 February 184 157 230 187 179
'98 December 147 130 180 159 129
'98 September 158 140 190 169 144
'98 June 162 143 197 174 147
'98 March 171 167 178 188 153
'97 December 126 105 165 154 92
'97 September 141 119 181 161 119
'97 June 119 106 143 145 89
'97 February 87 66 124 97 74
'96 November 95 78 127 107 78
'96 October 100 95 118 107 92

B. PERSONAL INDEX


  OVERALL TYPE OF INVESTORS GENDER OF INVESTORS
    Average Substantial Male Female
Personal Optimism Index
'99 July 115 103 136 118 112
'99 June 100 88 120 102 97
'99 May 110 99 128 120 99
'99 April 114 108 127 118 110
'99 March 108 100 122 111 105
'99 February 110 97 131 114 104
'98 December 108 99 125 113 100
'98 September 104 97 118 110 96
'98 June 105 95 123 108 101
'98 March 104 96 118 113 93
'97 December 103 92 123 108 96
'97 September 101 90 122 106 96
'97 June 104 95 119 115 92
'97 February 97 84 117 100 93
'96 November 99 86 118 102 95
'96 October 95 86 115 97 94

C. ECONOMIC INDEX


  OVERALL TYPE OF INVESTORS GENDER OF INVESTORS
    Average Substantial Male Female
Economic Optimism Index
'99 July 65 57 80 72 58
'99 June 59 59 58 60 57
'99 May 68 60 82 79 58
'99 April 71 63 83 83 57
'99 March 57 51 67 60 54
'99 February 76 69 89 79 73
'98 December 57 52 67 65 44
'98 September 63 57 72 68 56
'98 June 71 66 81 78 64
'98 March 73 75 70 83 62
'97 December 62 54 77 73 49
'97 September 62 58 68 72 51
'97 June 57 52 64 69 43
'97 February 43 37 54 52 32
'96 November 40 36 53 46 31
'96 October 41 41 42 48 32

D. GOVERNMENTAL INDEX


  OVERALL TYPE OF INVESTORS GENDER OF INVESTORS
    Average Substantial Male Female
Governmental Optimism Index
'99 July -9 -12 -6 -4 -16
'99 June -28 -33 -19 -34 -20
'99 May -22 -19 -27 -22 -23
'99 April -20 -20 -19 -14 -27
'99 March -20 -21 -18 -19 -21
'99 February -2 -9 10 -6 2
'98 December -18 -21 -12 -19 -15
'98 September -9 -14 0 -10 -8
'98 June -14 -18 -7 -12 -18
'98 March -6 -4 -10 -8 -2
'97 December -39 -41 -35 -28 -53
'97 September -22 -29 -10 -17 -28
'97 June -42 -41 -41 -39 -46
'97 February -53 -55 -47 -55 -51
'96 November -44 -43 -44 -41 -48
'96 October -36 -33 -39 -38 -34


Gallup https://news.gallup.com/poll/3685/index-investor-optimism-moves-sharply-higher-july.aspx
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