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Who’s Scared of the Big, Bad Market? Investor Confidence Up in 2012

Survey: 65% of investors have some confidence in U.S. markets


A recent survey conducted by the Center for Audit Quality reveals that two-thirds of individual investors believe in the markets. And while that’s not a ringing endorsement, I have to admit I was a bit surprised.

After all, how much mayhem have retail traders endured over the last few years? There was Madoff and Rajaratnam. There was high-frequency trading and flash crashes. Oh, yeah … and that whole losing your life savings in the 2008 downturn.

But get this: Almost two-thirds of individual investors (65%) have at least some confidence in U.S. capital markets. That’s an increase of 4 percentage points from 2011, according to the sixth annual Main Street Investor Survey.

From the Center for Audit Quality:

“Confidence in domestic markets has held remarkably steady throughout the financial crisis,” Executive Director Cindy Fornelli said. “Individual investors, as a group, have confidence in audited financial information released by public companies and believe that auditors are effective in looking out for investors’ interests.”

Other findings:

  • 70% of investors believe the American economy will either stay the same or improve over the next year; only 20% believe it will get worse.
  • While just 25% of investors expect their personal financial situation to improve, 64% expect it to stay the same over the next year. At least they aren’t worried!
  • Confidence in capital markets outside the United States fell to a low of 35% (from 43% in 2011).

Interesting stuff. It appears that despite all the nonsense that has happened, investors are more willing to play the stock market game in 2012 — and might be getting their swagger back.

It’s worth noting, of course, that this survey was conducted and released during a rally for U.S. equities. The S&P 500 is up about 15% year-to-date … so I wonder what the results would be if we saw a big leg down tomorrow.

Jeff Reeves is the editor of and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at or follow him on Twitter via@JeffReevesIP

Article printed from InvestorPlace Media,

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