How Do Investors Feel About the Stock Market?

Investors express an overall lower level of confidence in U.S. stock markets, according a monthly survey conducted by Millionaire Corner, which identifies the federal debt and high unemployment as key factors weighing down sentiment.

One-third of the investors, who have investable assets ranging from less than $100,000 to more than $1 million, say they’ve become less confident in U.S. markets over the past year, according to our August survey of more than 1,100 individuals. Twenty-two percent say they are more confident, and 45 percent say their level of confidence has not significantly changed.

Investors who have lost confidence in U.S. stock markets are most likely to cite the federal deficit, which raises the probability of tax increases, as the reason for their lowered outlook.  More than 62 percent see the national debt as a major threat to economic growth. Nearly 53 percent attribute their waning confidence to stubbornly high unemployment. Slightly more than half are worried about the European debt crisis, which they expect to cause extreme market volatility. More than 18 percent expect returns on U.S. markets to be low by historic standards and more than 7 percent believe they can realize a better return with other types of investments.

Slowing growth in China and other Asian markets is a concern to more than 27 percent of investors and 24 percent perceive the market as “too risky.”

Investors who feel more confident about the stock market are most likely to attribute their outlook to a slowly and steadily improving economy. More than 57 percent say the worst of the financial crisis is over, and 27 percent perceive U.S. companies as enjoying a “strong financial position.” Roughly 20 percent expect markets to rally after the November election and 20 percent believe the real estate market has stabilized and will begin to contribute to the economic recovery.