On the investor class: John Zogby interview June 24, 2004

The first in a monthly series of investor polls was released this week by Wall $treet Week with FORTUNE and Zogby International. Karen Gibbs talked to John Zogby about the results and what they indicate for the financial world and its intersection with politics, with the presidential election just five months away. Excerpts of their conversation will air tomorrow on the June 25, 2004 show, but meanwhile, here's a longer version of their talk:

» Full poll results

KAREN GIBBS: With the presidential election less than 5 months away, the candidates are scrambling to figure out what's really important to voters. Despite events in Iraq and on-going fears about terrorism, poll after poll tells us that it's still the economy. But it's not as simple as that. We're now a nation of investors, as we know all too well. What's good for the market and what's good for individual investors is not always the same. In an effort to find out what's really important, we've asked top political pollster John Zogby to find out what's on the mind of the investor next door.

John, welcome.

JOHN ZOGBY: Hi, Karen.

GIBBS: Well, John, when you asked investors what would make them change their portfolio, 67 percent said personal events. What do you make of that?

ZOGBY: This is the investor next door, people like you and me. These aren't risk managers, these aren't Wall Street types. These are people that are in it for the long haul, and essentially personal things matter much more than the global or the external factors.

GIBBS: And it was very interesting that when you asked about, investors if they lost health care, 39 percent said that they would exit the stock market and look for safer investments.

ZOGBY: Absolutely. That is cataclysmic. You've got 1 in 3 voters who are afraid of losing their health benefits in the next 12 years. Losing part or all of their health care benefits is deemed the most dramatic of any of the situations that we've tested.

GIBBS: But when you suggest a really positive event, such as the capturing of Osama bin Laden, only 22 percent would be willing to increase their risk.

ZOGBY: And it's important, and it's 1 in 5, 22 percent, and yet the personal trumps the global in every one of these cases that we tested.

GIBBS: Among the three presidential candidates running, Bush, Kerry and Nader, 27, I'm sorry, 47 percent said that they would vote for Bush today. Does that surprise you?

ZOGBY: No, it doesn't. A couple of months ago it was Kerry by a couple of points. It's very close, but Bush has the edge among investors, but nothing he can really go to the bank with yet. Investors should be with the incumbent.

GIBBS: Is it just the incumbent, or is it that Wall Street and investors are perceived as mostly Republican?

ZOGBY: They are, and in our sample we have 3 points more Republicans who are investors than are Democrats, and that's the exact opposite of what all voters are in the universe.

GIBBS: And it's also very interesting that 43 percent say they would be better off with President Bush, while 34 percent say they'd be better off financially under Kerry. But there's a huge 23 percent that's not sure.

ZOGBY: Isn't that really interesting? More say they're better off with Bush than Kerry, yet they're voting for Bush by even more, it's at 47 percent. But the 23 percent who are not sure, that's not a good sign. It's a red flag for the incumbent.

GIBBS: Is there a way for either candidate to take advantage of that number?

ZOGBY: Well, for Bush, obviously the economy has to be perceived as doing better. It has to be perceived as doing personally better for voters. We're not there yet. Average voters don't look at the economy and economic growth in terms of billions and trillions. They look at in terms of thousands. What's it mean for me and my family and my neighborhood? For Kerry, Kerry can take advantage of the fact that optimism about the near future is not quite there yet with a majority of voters.

GIBBS: You also have a story, a question that you asked investors. Which company would they rather invest in? A company with a strong stock market performance and poor worker relations, or mediocre stock performance and fair work relations? And a surprising 73 percent chose the latter.

ZOGBY: This is the investor next door, and basically that includes people who are in unions, it includes people who make modest sums of income, and includes you and me, my neighbor behind the curtains next door and across the street. Basically do unto others as you would have them do unto yourself. And so essentially these voters are saying, "I care about my neighbor." A good company is the kind of company that takes care of its workers, takes care of the environment, takes care of all the other kinds of situations that we've tested in our poll.

GIBBS: Well, one company that struggles with the issue of pleasing employees versus the demands of Wall Street is Costco. I visited this retailing giant to see why the employees are so happy.

One company that struggles with the issue of pleasing employees versus the demands of Wall Street is Costco. I visited this retailing giant to see why the employees are so happy.

(Video package on Costco follows)

Well, John, using Costco as an example, it seems investors are saying, "Do as I say, not as I do."

ZOGBY: Yeah, it really does. There are so many variables that are involved in making investments. You know, half of the investors out there tell us they do it themselves, but we don't know what kind of due diligence they make. And then the other half tell us that they use a financial planner or a broker, and to be sure the broker or the planner's responsibility is to find the most profitable earnings for the investor, and that's why the disconnect. But it really is intriguing that Wall Street and Main Street aren't necessarily on the same page in terms of values.

GIBBS:John, another issue that has really grabbed the attention of Main Street is off-shoring, the loss of jobs to overseas. But the Bureau of Labor Statistics says that only 2 percent have lost jobs due to off-shoring. What does your poll find?

ZOGBY: We find 8 percent of investors who say that they've lost jobs due to off-shoring. The reality is that we've tracked about 220,000 - 225,000 jobs that have been off-shored, and yet these are white collar jobs. This is new. These aren't manufacturing jobs that we've been accustomed to. What's happened is what I call a PCB effect. It only takes a few drops of PCB to contaminate an entire river. In this instance, those 220,000 jobs have caused a scare among white collar workers and among high income earners, those over $75,000 a year or more. It's a big issue. Eight percent feel that way. This is 8 percent of investors. Remember anything that moves a few thousand votes one way or another in Ohio or Missouri or West Virginia - wow; that can change the course of this election.

GIBBS: John, you've done some pioneering work on the investor class. Who is the investor class, and why are they so important?

ZOGBY: We polled investors in this poll, but very simply, the investor class, those are people who say "I'm a member of the investor class." They could be low income, they could be union members, they could be minorities, they could be people with very modest portfolios. But if a person says I'm a member of the investor class, they're 10 to 12 points generally more likely to vote Republican than Democrat. So a decline in the actual number of people who say "I'm a member of the investor class" bodes poorly for Republicans this fall. So one of the things that we're going to be tracking monthly here at Wall $treet Week with FORTUNE is this self-identified investor class. You see the numbers that are up on the screen, but if we see that number continue to go down, bad news for Republicans; if that number starts to climb up, good news for Republicans. Just one of the many groups that we're watching that makes this election so fascinating.

GIBBS: John, the numbers have declined since October of 2000. Why have they declined?

ZOGBY: Folks that we followed up with told us that they either changed their definition of what it meant to be a member of the investor class, which meant they couldn't focus on the future anymore, they had to focus on the present. That's important. But also a number of people, you know, 1 in 4 of that group told us they lost their 401(k)s, which is pretty dramatic, or they lost an extreme amount in value of their portfolio. That's what's happened. The economy, the bubble burst.

GIBBS: You've done pioneering work in polling the investor class. Who are they, and why has this class declined?

ZOGBY: The group we call the investor class, those are people who say "I'm a member of the investor class," regardless of their income level, the size of their portfolio, whether they're minorities, whether or not they belong to a union.

That's a group that says "I'm a member of the investor class," regardless of their income, whether or not they belong to a union, regardless of the size of their portfolio. A few years ago, almost half of all voters said "I'm a member of the investor class." That was good news for Republicans. That was a group of people then, almost half who were saying "I'm looking to the future, the present is good, I'm looking to the future, I'm part of this opportunity society." The fact that it has declined so dramatically, down to below 30 percent, suggests that there is some bad news for Republicans. The bubble seems to have burst. One in four people who said "I used to be a member of the investor class, but I'm not today" told us they changed their definition because the bubble burst. Another quarter, 23 percent, told us that they lost their 401 (k) or a significant portion of the value of their investments. And so very simply, this is one of the numbers that we're going to track during this election monthly. If we see those who say "I'm a member of the investor class" start to climb back up, start seeing some good news for President Bush and for Republicans. If we see that number go down, bad news for the Republicans.

GIBBS: John Zogby, thanks for joining us.

ZOGBY: Thank you, Karen.