Wall Street's Wild Week: Investors Live With It
Half of stockholders say they have been hurt by stock declines.
Oct. 13, 2008 — -- Stockholders are living with Wall Street's crash, their broad economic concern tempered by the fact that most by far are buy-and-hold investors.
After one of the market's worst weeks in history, just half of stock and stock-fund owners say they've been hurt financially, and less, 20 percent say they've suffered a great deal. The pain is a bit lower still among all Americans because many don't own stocks.
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That doesn't meant the global financial crisis isn't affecting public attitudes; indeed it's sent them into a tailspin. A record 90 percent in this ABC News/Washington Post poll say the country's on the wrong track, 88 percent are worried about the economy's direction and 44 percent are confident they'll have enough money on which to retire. (See separate analysis.) But when it comes to the stock market in particular, Americans tend to respond with fortitude, and so far that's the case again.
On the one hand, in interviews the two nights after the Dow Jones industrial average finished down 18 percent in one week, 78 percent said they're worried about the performance of the stock market. Two-thirds (67 percent) are worried about their own family's financial situation. Less, but still 44 percent, are worried about their ability to get a loan if necessary.
In each case, though, considerably fewer are "very" worried about each of these, especially their family finances and the availability of credit. And fewer still are making panicked sell orders -- leaving those, it seems, to the professionals.
STOCKHOLDERS – Fifty-eight percent of Americans own stocks or stock funds; that's grown steadily from a third in a 1987 ABC/Post poll. But most of them by far are in funds; 22 percent of Americans report that they own individual stocks. And 42 percent report no market investments at all.
Among those who do hold stocks or funds, moreover, nearly all -- 95 percent -- describe themselves as long-term, buy-and-hold investors. And indeed they're holding tight: While 68 percent have checked their portfolios in the last few weeks, 87 percent of them have not changed their investments. And among the 13 percent who have made adjustments, most have bought as well as sold.
With more people in the market, more say they're affected by it. After the crash in October 1987, 20 percent of all adults said they'd been hurt by the drop in stock prices. That rose to 37 percent when the market dropped in July 2002. And it's 43 percent now, when you include people without stock investments. (As noted, it's 50 percent among stock and stock-fund owners.)
Again, though, fewer say they've been hurt "a great deal" -- 16 percent of all adults, and 20 percent of stock and stock-fund holders.
There are several likely reasons. The market's risk is built into public attitudes; 79 percent in this poll call the stock market a risky investment. The pain to most investors may be mitigated by their longtime frame, by factoring in past gains and by the fact that stockholders tend to be better off financially and so better positioned to handle the hit.
Among people with household incomes of more than $100,000, 93 percent own stocks or stock funds; among those in less-than-$50,000 households, it's 39 percent.
None of this, of course, eases the pain of the 16 percent who report a "great deal" of financial damage -- a minority of the public, but many millions of individuals.
RETIRE – Even with the insulation of a long-term investment, retirement worries are up. Forty-nine percent are not confident they will have adequate assets for retirement, higher than it's been in polling back to 1999.
Still, that's more a function of economic anxiety overall than of the market per se. Because they're better off in the first place, people with stock investments are more confident in their retirement resources than people without stocks, by 51 percent to 33 percent. And confidence is 16 points higher among those who own stock directly rather than through mutual funds, 61 percent to 45 percent -- again because they're better off in the first place.
RISK – Majorities have rated the market as "risky" going back to 1988, though it's spiked during bear markets. After the 1997 crash 69 percent called the market risky; that fell to 52 percent during the dot-com boom in 1999, but rose to 80 percent in July 2002 after accounting scandals and a market adjustment. At 79 percent it's essentially returned to that peak.
Those not invested in the market are 11 points more likely than investors to call it a risky place to put their money; 86 percent say so. That drops to its lowest among individual stock owners, but among them still 69 percent see the market as risky -- even while they're directly in it.
WORRIES – Worries over the economy, personal finances and the stock market have risen in the last few weeks. Sharpest has been the rise in those very worried about the stock market, up 15 points to 48 percent. High-level worry about the economy overall is up 8 points, to 48 percent; as noted, fewer, 23 percent, are very worried about their own family's finances, and that's essentially unchanged.
Those who have checked their investment portfolio are more worried about the economy, the stock market and to a lesser degree their own finances. What's not clear is whether they're worried because they checked -- or they checked because they're worried.
METHODOLOGY:This ABC News/Washington Post poll was conducted by telephone Oct. 10-11, 2008, among a random sample of 517 adults. Results have a 4.5-point error margin. Sampling, data collection and tabulation by TNS of Horsham, Pa.