U.S. Investors' Worries

According to a recent Gallup poll, from which the Wells Fargo/Gallup Investor and Retirement Optimism Index is based, the top worries of investors in the US are a politically divided government and the budget deficit.  Fifty-four percent of investors say now is a good time to invest in the financial markets, up from 51% in March and 39% in November 2012. Still, in a separate question, 62% of investors anticipated a market correction that would take back significant market gains later this year. Despite that expectation, only 16% of those who expected a correction say they shifted into safer investments, while 80% made no changes to their portfolio's composition.

From  a list of 10 specific issues, investors are most likely to say the greatest challenge they are facing is "a politically divided federal government," with 73% saying it is hurting the current investment climate "a lot." This item has been near or at the top of investors' concerns since September 2011. The federal budget deficit is investors' second-greatest concern, with 67% saying it is hurting the investment climate a lot; this has been near the top of investors' worries over the past 2 1/2 years. 

Investors' concerns about a politically divided federal government are also consistent with Gallup's recent polling concerning the problems facing the country. 

The Wells Fargo/Gallup Investor and Retirement Optimism Index, conducted quarterly, is a broad measure of investor perceptions that tends to be a precursor of economic activity. The current survey, conducted May 16-27, included a random sample of 1,426 investors.
The index peaked at 178 in January 2000, just before the dot-com bubble burst, and hit a low of -64 in February 2009, just before the equity markets bottomed out in March 2009.

Sue Hodge

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