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

by Jeff Reeves | September 19, 2012 11:16 am

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[1] 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:

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 InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.”[2] Write him at editor@investorplace.com or follow him on Twitter via@JeffReevesIP

Endnotes:
  1. high-frequency trading: http://investorplace.com/2012/02/high-frequency-trading-is-high-tech-cheating/
  2. “The Frugal Investor’s Guide to Finding Great Stocks.”: http://www.amazon.com/dp/B007KB9CSI/ref=rdr_kindle_ext_tmb

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