Investor Attitudes Further Shaken in Another Turbulent Month

The Spectrem Affluent Investor Confidence Index (SAICI)^SM  inched upward two points to a mildly bearish -16 points, but the Spectrem Millionaire Investor Confidence Index (SMICI)^SM  dropped one point to -10, still neutral territory. The last time this index was in negative double-digits was August 2010.

   This month’s insights were collected prior to the most recent nearly week-long market selloff prompted by continued global market stagnation, as well as the Federal Reserve’s latest initiative to stimulate the economy by purchasing $400-billion of longer-term Treasury bonds. The first weeks of September, however, did nothing to inspire wary affluent investors to move off the sidelines. For the third straight month, they opted to Not Invest, but at the highest level in almost three years. Non-Millionaire households were especially reluctant investors. The level of these who chose to Not Invest was the highest since December 2008. Millionaires, however, were more engaged in the market.

   Non-Millionaire households drove an upturn in the Affluent Household Outlook, which nevertheless remained negative. Millionaire attitudes toward the Economy dropped to a more than three-year low.Economic issues dominated headlines. This month saw a spate of disappointing news, beginning with a report that found that the U.S. economy had not created any jobs in August. A Census report revealed that the nation’s poverty rate had increased to its highest level since 1993. Unemployment, meanwhile, remained stubbornly above 9 percent and initial jobless claims remained well above 400,000. Thus, investors pointed to the Economy as the most serious threat to achieving their financial goals at this time.

   They also cited the Political Climate, which, with the looming 2012 presidential election, is becoming increasingly partisan. This month President Obama introduced his jobs creation and debt reduction plans, which immediately sparked heated debate, particularly among the announced Republican presidential candidates. Confidence that the President and Congress could work together to enact a workable job plan is low, according to a separate Spectrem Group investor survey conducted this month. Less than 10 percent were optimistic the Obama administration and Congress could work collaboratively. Nearly three-quarters felt they could not.