It's been a wild ride on the financial market roller coaster this past year, and investor opinion regarding whether now is a good time to invest has risen and fallen accordingly. The last quarter of 2001 and the first quarter of 2002 showed a resurgence of expectations in the investment potential of financial markets, then expectations fell significantly in second quarter of 2002 and dove further downward in the third quarter.
Over the past year, investor expectations have declined across the board, but the degree of that decline has varied among demographic groups. Significant differences exist between the assessments of men and women. "Substantial" investors (those with $100,000 or more in investable assets) differ significantly from average investors (those with $10,000 to $99,999 in investable assets) in terms of assessment of the current financial market situation.
Men Losing Bullish Tendencies
When it comes to assessing whether the time is right for investing, men tend to give more positive assessments than women do. Just two quarters ago, the gap between men and women was significant, with 75% of men and 64% of women saying it was a good time to invest in the financial markets.
But men have grown far less positive as the year has progressed. The percentage of male investors saying it's a good time to invest has fallen from 75% in the first quarter of this year to 55% in the third. Women's assessments have fallen somewhat less dramatically, from 64% in the first quarter to 50% in third. Thus, a 10 percentage-point difference between men and women has narrowed to a five percentage-point spread in the most recent quarter.
Bigger Investors, Bigger Hopes
Over the past year, substantial investors have been more likely to say that it is a good time to invest than average investors, and this trend has continued into the third quarter. Currently, 57% of substantial investors say it is a good time to invest, compared to just 50% of average investors.
Gender and Investment Level
This quarter, women are no less likely than men among substantial investors to think that it is a good time to invest -- 56% among both genders think now is a good time to invest. This represents a notable change from previous quarters, when, among substantial investors, males were far more likely to be positive about the market's potential. A general lack of confidence in the financial markets seems to have closed this gender gap.
The same cannot be said of average investors, however. Among this group, women are still less likely than men to say that this is a good time to invest, by a margin of 47% to 54%.
Key Points
Far fewer investors are willing to say that now is a good time to invest in the financial markets than were willing to say this earlier in 2002. Ratings from men with more than $100,000 to invest -- typically among the most exuberant groups of investors when it comes to assessing the promise of returns from financial markets -- have fallen from relatively high levels just two quarters ago to a notably lower point this quarter. Women with more than $100,000 to invest have also become more negative during this time period, although their assessments have not dropped as sharply as those of their male counterparts.
To the extent that these different assessments of the financial market affect portfolio decisions, it appears that the more conservative tendencies of women served them well in recent months. Had the market experienced the uptick that some investors had predicted in early 2002, a more aggressive strategy would have paid off and the more conservative investors would have lost out on potential gains. But in hindsight, it seems that female investors in the "average" category -- who tend to be more conservative than average male investors, high-investing men and high-investing women -- were most inclined to be prudent during the financial turmoil of the past year.
*These results are based on telephone interviews with 15,045 investors, aged 18 and older, conducted the first quarter of 2001 through the third quarter of 2002. For results based on the total sample of investors, one can say with 95% confidence that the margin of sampling error is ±1%.
