Should You Buy Tech Because It’s Trustworthy — or Sell Oil Because It’s Not?

by Jeff Reeves | August 20, 2012 6:00 am

In a world where trust is everything, investors would be wise to pay attention to a recently released poll ranking the industries viewed most (and least) favorably by the American public.

Alyssa Oursler recently recapped the best and worst sectors[1] rated by a recent Gallup poll, and the results are telling.

Apparently, the best-liked industries (and subsequently, brands) exist largely in technology, and to a lesser extent in retail and food.

No surprise there. Magical technology stocks like Apple (NASDAQ:AAPL[2]), Amazon (NASDAQ:AMZN[3]) and Google (NASDAQ:GOOG[4]) have made so many things easier and cheaper and more accessible to consumers. And we all know the comfort from a good meal or the truly valuable service that a helpful retail associate can provide.

The worse? Banking, the government, real estate and energy.

No surprises there, either. Bank of America (NYSE:BAC[5]) and Citigroup (NYSE:C[6]) made no friends during the “too big to fail” era, and recent bank scandals[7] include LIBOR rigging and the JPMorgan Chase (NYSE:JPM[8]) debacle with its London Whale[9] only fanned the flames. Housing also took a lot of blame in the wake of the mortgage bubble, and big oil stocks like Exxon Mobil (NYSE:XOM[10]) always seem to be a target whenever crude oil ticks up a few cents in price.

The government, of course, needs no explanation for its poor reception.

Interesting to me, too, is the middle group of companies that contain some strong feelings. Take health care, with super-strong positive ratings at 42% and ugly negative ratings also at 42%, but little in the neutral camp. They zero out each other, but show the dichotomy between an industry that is literally a life saver to some and nothing but a money pit for others.

Is there an investable angle here? Maybe. In July, I wrote an article with the headline “Forget Uncertainty: TRUST Is the Big Issue for Investors.”[11] Andrew Ross Sorkin followed suit (obviously a financial media superstar like him copies InvestorPlace, right?) with his own missive a few weeks later, “Why Are Investors Fleeing Equities? Hint: It’s Not the Computers.”[12]

The gist is that many folks don’t believe in the market and think the game is rigged by shady players. Shenanigans in industries like housing and banking have hurt — and the allegations of price manipulation and “speculation” in Big Oil still weighs on public perceptions.

No surprise that these industries remain significantly below their pre-recession peak, while tech has remained tough.

Of course, it might be a chicken and the egg thing where performance affects perception, and that in turn affects performance. There’s no way to know for sure which started to crumble first.

But it’s telling that amid a deficit of trust, tech is the most favorably received business among the broader American public, and oil & gas remains least favorable.

That could matter amid the difficult fight for dwindling consumer dollars.

Jeff Reeves is the editor of and the author of “The Frugal Investor’s Guide to Finding Great Stocks.”[13] Write him at or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.

  1. best and worst sectors:
  2. AAPL:
  3. AMZN:
  4. GOOG:
  5. BAC:
  6. C:
  7. recent bank scandals:
  8. JPM:
  9. London Whale:
  10. XOM:
  11. “Forget Uncertainty: TRUST Is the Big Issue for Investors.”:
  12. “Why Are Investors Fleeing Equities? Hint: It’s Not the Computers.”:
  13. “The Frugal Investor’s Guide to Finding Great Stocks.”:

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