Investor Anxiety-Confidence Index Conducted April 2004 & June 2004

» John Zogby sheds light on the results

Only five months before the presidential election, voters/investors indicate that they would be more likely to unload stocks if they lost their health care benefits than if there was another terrorist attack in the United States

According to the benchmark Wall $treet Week with FORTUNE/Zogby International 'Investor Anxiety-Confidence Index,' more than half (51%) of voters/investors say they would change their investment strategy if they lost their health care benefits while just 38% would alter their investments if the U.S. suffered another terrorist attack. Other key events that investors say might impact their investment strategies include: the announcement of a significant rise in interest rates, and the Dow Jones rising by 1,000 points.

"While the investor next door is concerned about the world around him and her, it is the personal tragedies or opportunities that drive major investment decisions," said John Zogby, President of Zogby International. "For the most part," he added, "we found that the average investor is very conservative and deliberative."

"At the same time, election results yield much less dramatic action by investors," Zogby noted. "Only 17 percent would take some additional risk with a hefty margin of victory by President Bush and only 12% would do the same in a Kerry victory scenario."

The Wall $treet Week with FORTUNE/Zogby International poll is the first in a series conducted monthly from now to shortly before the November presidential election to track the issues and events that are most likely to result in investor/voter action.

Zogby International interviewed 950 likely voters chosen at random nationwide. Of these likely voters, 636 own some sort of stock. All calls were made from Zogby International headquarters in Utica, N.Y., from 6/2/04 through 6/5/04. The margin of error is +/- 3.2 percentage points. Slight weights were added to region, party, age, race, religion, gender, and 2000 presidential vote to more accurately reflect the voting population. Margins of error are higher in sub-groups. Numbers have been rounded to the nearest percent and might not total 100.

The Poll

I. Demographics

II. Investor behavior

III. Investor outlooks

IV. Politics/National issues

V. Poll methodology and characteristics

Demographics

Would you consider yourself to be a member of the "investor class?"

• Yes: 62%
• No: 37%
• Not sure: 1%

Just over three in five (62 percent) consider themselves members of the investor class, 37 percent do not describe themselves that way and 1 percent are not sure.

(The next two questions were asked only of those who do not consider themselves members of the investor class.)

Have you ever considered yourself a member of the investor class?

• Yes: 15%
• No: 85

The vast majority (85%) of those who do not consider themselves investors, never have done, while 15% say they used to consider themselves investors.

The overwhelming majority in every sub-group do not consider themselves investors, including those in the highest income level. Interestingly, Republicans and Independents are more likely than Democrats to not consider themselves investors.

Which of the following best explains why you no longer consider yourself a member of the investor class?

• Just changed mind about what it means to be an investor: 26%
• No longer have a 401k pension plan: 23
• Lost most/all investments in the "bubble burst" a few years ago: 8
• *Other: 21
• Not sure: 22

When asked why they no longer consider themselves investors, respondents were generally evenly divided -- 26% say they just changed their mind about what it means to be an investor; 23% say they no longer have a 401(k) pension plan; 22% are not sure why they changed their mind; and 21% give other reasons. About one in twelve (8%) say they lost most or all of their investments in the bubble burst a few years ago.

Which of the following mutual funds or stock market investments do you own?

• Own stock through 401(k): 38%
• Own stock personally: 35%
• Own stock through other pension plan: 27%

Just under two in four (38 percent) own stock through a 401(k). Just over one in three (35 percent) own stock personally and more than one in four (27 percent) say they own their stock through other pension plans.

Which of the following best represents the size of your investment portfolio?

• Less than $50,000: 37%
• $50,000 to 99,999: 22%
• $100,000 to $499,999: 27%
• $500,000 to 999,999 8
$1 million or more: 4%
• Have no investment portfolio: 2%
• Not sure: 2%

More than four in five (86%) investors say the size of their investment portfolio is less than half a million dollars, including more than one in three (37%) who say it is less than $50,000. About one in twelve (8%) have a portfolio worth between $500,000 and $1 million, while less than one in twenty (4%) have a portfolio worth $1 million or more. Two percent have no investment portfolio or are not sure of the size of their investments.

Would you say that your stock market investments have:

• Have rebounded a little bit but are not back to where they were: 61%
• Gotten back to about where they were before the "bubble burst": 22
• Have not recovered at all: 8
• Have lost further: 2
• Other/Not sure: 7

By nearly three to one, respondents are more likely to say that markets have rebounded a little than that markets have gotten back to where they were before the bubble burst (61% to 22%). Less than one in ten (8%) say markets have not recovered at all and 2% say there has been further slippage. Seven percent are not sure.

Again, responses in the sub-groups follow the responses overall. Those who identify themselves as investors are more likely than those who do not to indicate a rebound in their investments. Non-investors are more than twice as likely as investors to say their stocks have not recovered at all (15% vs. 4%).

Respondents living in the West (12%) are more likely than those in other regions to say their stock investments have not recovered at all (7% average). Republicans (28%) are twice as likely as Democrats (14%) to say their stock investments have gotten back to where they were before the "bubble burst," while Democrats (12%) are more likely than Republicans (7%) and Independents (5%) to say that their investments have not recovered at all.

Would you say that financially, you are better off, worse off, or about the same as you were three years ago?

• Better off: 32%
• Worse off: 27%
• About the same: 41%

A plurality (41%) say they are about the same financially as they were three years ago, while one in three (32%) say they are better off. More than one in four (27%) say they are worse off.

Respondents who are most likely to say they are better off are self-identified investors (36%), 18-29 year olds (69%), southerners (47%), those living in the "Red States" (38%), Hispanics (57%), Republicans (45%), college graduates and those with some college (34% each), and men (35%).

On the other hand, those who are most likely to say they are worse off include non-investors (34%), those over 50 (34%), African Americans (35%), Democrats (41%), high school graduates (34%), nearly half of those who have lost a job due to downsizing or outsourcing, are afraid of losing a job, or are working at a job that pays less than an immediate previous job and women (31%).

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Investor behavior

In making your investment decisions, do you…?

• Make unassisted decisions: 47%
• Use a certified financial planner: 29%
• Use a broker: 19%
• Do not do any investment planning: 4%
• Not sure: 2%

Just under half (47%) say they make unassisted decisions when making investments. Twenty-nine percent use a certified financial planner, while 19% use a broker. Just 4% do no investment planning and 2% are not sure.

A plurality or majority in every sub-group say they make unassisted decisions when making their stock market investments.

How often do you follow the stock market?

• Every day: 30%
• A few times a week: 24
• A few times a month: 19
• A few times a year: 13
• Never: 14
• Not sure: 0

Respondents are generally well informed -- more than half (54%) follow the stock market a few times a week, including 30% of those who follow it every day. About one in five (19%) follow the market a few times a month and 13% a few times a year. About one in seven (14%) say they never follow the stock market. Sub-groups follow the general overall pattern.

How do you currently use your stock market investment?

• Do not use currently, saving for retirement or other purposes: 82%
• Live off the dividends: 8
• Spend the gains from investments: 4
• Other: 4
• Not sure: 1

More than four in five (82%) say they do not use their stock market investment and are saving it for retirement or other purposes; 8% currently live off the dividends and 4% each spend the gains from investments and use it for other purposes. Just 1% are not sure. Again, respondents in all sub-groups follow the overall pattern.

Which of the following best explains how you expect to use your stock market investments?

• To maintain current lifestyle after retirement: 50%
• To provide for a simple retirement: 21
• To allow me to afford some luxuries like vacations or a boat: 9
• To provide for a college education for children: 9
• To purchase a house: 1
• *Other: 8
• Not sure: 2

* Other: Maintain current lifestyle (13); Family inheritance (13); Retirement (10); Future savings and investments (9); Charitable donations (3); Lost/no savings, stocks, dividends (3); Not sure (4)

Half (50%) say they expect to use their investments to maintain their current lifestyle, while one in five (21%) say they are going to use it to provide for a simple retirement. Nine percent each say they will use investments to afford some luxuries or to provide a college education for their children. Only 1% will use investments to purchase a house and 2% are not sure.

Most sub-group generally follow the overall pattern. As age increases, so to does the incidence of those saying they expect to use their stock market investments to maintain their current lifestyle. In addition, women (53%) are more likely than men (47%) to say they expect to use their investments for the same purpose.

Would you say that you are trading or investing more, less or about the same as you were three years ago?

• More: 17%
• Less: 23
• About the same: 57
• Not investing/Not sure: 4

More than half (57%) say they are investing about the same level as three years ago, while one in four (23%) are trading less. Seventeen percent are trading more and 4% are no longer trading or are not sure.

One in three of the youngest investors say they are trading or investing more than they were three years ago, while just 8% of those 65 and older agree. More than one in four (28%) seniors say they are investing less compared with 5% of those under 30 who say that.

Have your losses in the stock market, if any, forced you to do any of the following?

Table 1. Changed Plans Due to Loses in Stock Market

The overwhelming majority say that losses in the stock market have not forced them to work longer hours (88%) nor have their losses made them rethink retirement plans (81%). However, about one in six (17%) say they have had to make some changes in their retirement plans.

Self-identified non-investors are more likely than their counterparts to say that they have had to work longer hours and that they have had to change their retirement plans because of losses in the stock market.

Using a scale from one to five, with 1 being "Sell stock," 2 being "Look for safer investments," 3 being "Do nothing," 4 being "Take a few more risks with potentially higher yield," and 5 being "Take a lot more risks," how do you anticipate your response to each of the following potential events?

Table 1. Investor Reaction Regarding Stock Investments to Various Events (ranked by "Do nothing")

Think of the last time you made significant changes in your stock portfolio. Which of the following was the primary motivation for making those changes?

• Personal events: 67%
• National/Domestic events: 17%
• International events: 3%
• Other: 7%
• Not sure: 6%

Just over two in three (67%) respondents say a personal event was the main reason they last made significant changes in their stock portfolio; national or domestic events followed a distant second (17%).

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Investor outlooks

How do you feel about the US economy into the future?

• Very confident: 16%
• Somewhat confident: 38%
• Confident: 54%
• Somewhat anxious: 32%
• Very anxious: 12%
• Anxious: 44%
• Not sure: 2%

Over half (54%) say they are confident about the US economy into the future. However, a sizeable number (44%) feel anxious. Just 2% are not sure.

Three in five (60%) self-identified investors, compared with (45%) of non-investors, are confident about the US economy. Those under 30 (78%) are confident about the US economy in the future, while nearly half of those over 30 are anxious.

More than half of respondents living everywhere but the East are confident about the US economy, while 55% of those in the East are anxious. More than three in five (63%) living in the "Red States" are confident about the US economy into the future, while more than half (53%) of those living in the "Blue States" are anxious.

Republicans (80%) are about three times as likely as Democrats (28%) to be optimistic about the US economy. Independents are more evenly divided, with slightly more saying they are confident about the US economy. Men (62%) are more likely than women (47%) to be confident about the economy and confidence increases as income increases.

Which of the following best describes what you expect to leave to your heirs?

• A small estate which may include some money, investments, and/or property: 53%
• A medium estate which may include adequate amounts of money, investments, and/or property: 34%
• A large estate which may include large amounts of money, investments, and/or property: 4%
• Nothing: 6%
• Not sure: 2%

Just over half (53%) expect to leave a small estate, while one on three (34%) believe they will be able to leave their heirs a medium-sized estate. Less than one in twenty (4%) will leave a large estate and just over one in twenty (6%) expect to leave nothing to their heirs. Two percent are not sure. Sub-group results generally follow the overall results.

Do you feel that it is possible for you and your family to achieve the American Dream, or would you say it does not exist?

• Achieve Dream: 77%
• Does not exist: 17%
• Not sure: 7%

Just over three in four (77%) believe that the American Dream can be achieved, while 17% say it does not exist. Seven percent are not sure.

Southerners (88%) are the most likely to say they or their families can achieve the American Dream, while Easterners (65%) are least likely. Republicans (90%) are much more likely than Democrats (66%) and Independents (70%) to believe in the American Dream.

Surprisingly, a majority or plurality of "economic victims" still believe in the American Dream, with 60% of those who have lost a job due to downsizing still believing. Those who still believe in the American Dream and have lost their job due to outsourcing, however, are nearly tied with those who have lost a job for this reason and do not believe -- 46% vs. 44%. Seventy percent or more of those who are afraid of losing their job and who work at a job that pays less still believe in the American Dream.

Men (82%) are more likely than women (71%) to believe that they can achieve the American Dream.

For each of the next few questions, I am going to read to you a pair of investment opportunities. For each question, please tell me in which of the two opportunities you would invest if you were only allowed to choose one -- Stock A or Stock B.

Table 2. Importance of Company Stock Value vs. Ethical Behavior

Investors by-and-large are more concerned with ethical considerations concerning their investments than they are with the bottom line. About one in three or less say that they do not care if the companies they are investing in outsource jobs overseas, or fails to promote minorities and women, or may engage in practices that damage the environment; getting a good return on their investment is most important.

However, majorities of investors, and in two cases, more than three times as many investors, believe doing the right thing is most important for the companies in which they invest.

Which of the following do you think is the best indicator of a strong or good economy?

• Low unemployment/more jobs: 38%
• Growing GDP: 15
• New business start-ups: 10
• Increased consumer spending: 9
• Increased consumer savings: 6
• Improved productivity: 6
• Increases in the stock market: 4
• Higher salaries: 4
• Housing start-ups: 3
• Increased home prices: 1
• *Other: 2
• Not sure: 2

* Other: All (9); 2 Each (13%): Higher salaries/Not sure; 1 Each (7%): Consumer confidence/lower taxes

Nearly two in five (38%) believe the best indicator of a strong economy is low unemployment. Less than half as many (15%) say a growing GDP is the best indicator and one in ten (10%) look for new business start-ups or increased consumer spending (9%). Less than one in twenty (4%) think increases in the stock market indicate a strong or good economy.

Sub-groups closely follow the overall pattern. Regionally, respondents in the East (44%) are the most likely to say low unemployment is the best indicator of a strong economy, while those in the South (33%) are least likely to say this. Respondents in the East and Central Great Lakes region are nearly twice as likely as those in the South and West to say increased consumer spending is the best sign of a health economy.

One in three (34%) investors living in "Red States" say low unemployment is the best indicator, while 42% of those living in "Blue States" agree. Democrats are more likely than Republicans and Independents to cite low unemployment as the best indicator of a strong economy, while Republicans and Independents are nearly twice as likely as Democrats to say a growing GDP is the best indicator.

The lower the education, the more likely respondents are to say low unemployment is the best indicator, while those citing growing GDP increase with education. High school graduates are the most likely to choose new business start-ups as the best indicator.

Social activists and social conservatives (44% each) are the most likely to say low unemployment is the best indicator of a strong economy, while free marketers are closely divided between low unemployment (30%) and growing GDP (27%) as the best indicators.

NASCAR fans are nearly as likely to choose a growing GDP (25%) as they are low unemployment (30%), while those who are not fans are three times as likely to say low unemployment (39%) over a growing GDP (13%) is the best indicator of an improving economy.

Women (43%) are ten percentage points more likely than men (33%) to say that low unemployment indicates a strong economy.

Which of the following will be the most important to you in your vote for President in November?

* Other: War/homeland security (13); Economic opportunities (9); Moral character (6); New president/new government (4); Foreign policy (3); Against Democrats (3); Abortion/pro life; None (22)

Three times as many investors say a jump in the number of good paying jobs in this country (60%) will be most important in their vote for President this November, rather than stopping the flow of good paying jobs overseas (20%). Just under one in 10 (9%) say the increased value of their stock portfolio will be a determining factor in their vote.

Respondents who believe increasing good paying jobs will be the most important factor determining their Presidential vote are evenly divided among the Eastern, Central Great Lake, and Western regions of the United States (about 61% each). More than half living in Southern (54%) states also agree.

More than three in five whites, Republicans, and respondents with more than a college education say increasing good paying jobs is the most important issue to consider in their choice for a Presidential candidate in November. Women (63%) are more likely than men (57%) to be of the same opinion.

Which of the following statements comes closer to your own view -- A or B?

Statement A: The biggest responsibility for a company I own stock in is to make sure that the stock price continues to increase, making a profit for the shareholders, even if it means outsourcing good paying American jobs to countries overseas.

Statement B: While it is important that a company I own stock in makes sure that the stock price continues rising, it should not be at the expense of good paying American jobs going to countries overseas.

• Statement B: 72%
• Statement A: 23%
• Neither: 4%
• Not sure: 1%

By about three to one -- 72% vs. 23% -- investors believe that it is more important to keep good paying jobs in the US over simply increasing the value of their stocks. Sub-groups follow the general overall pattern.

Women (82%) are significantly more likely than men (63%) to say it is more important to keep good paying jobs in the US over simply increasing the value their stock.

Following are some ways that people define what it means to be well off or successful. As I read each, please tell me if fulfilling it is important in your definition of being well off or successful -- very important, somewhat important, or not important.

Table 3. Definitions of Success

For a substantial majority (85%), an important sign of success is to eliminate credit card debt, including 75% who say it is very important. Eighty-four percent say being able to donate a large amount of money to their favorite charity is a sign of success, including one in three (32%) saying it is very important. More than half (57%) believe the ability to travel anywhere they like whenever they like is an important indicator of success.

As expected, differences among sub-groups regarding eliminating consumer debt as a sign of success are several and varied. Majorities of investors living in the "Blue States" (60%) say eliminating debt is a sign of success, including over one in five who say it is very important.

Nearly three in five investors who consider eliminating debt as a sign of success are highly educated (58%) and are socially conservative (59%). More men (64%) than women (49%) to equate no debt with being well off.

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Political views

If the election for President were held today and the candidates were Democrat John Kerry and Republican George W. Bush, for whom would you vote?

• Kerry: 48%
• Bush: 44%

Those who identify themselves as a member of the investor class are more likely to vote for Bush (49%) than for Kerry (44%). On the other hand, those who do not identify themselves as investors are much more likely to vote for Kerry (53%) than for Bush (38%).

Support is strongest for Bush among 50 to 64 year olds (51%), while a plurality of voters in the other age groups support Kerry. Those living in the East are more than twice as likely to support Kerry as Bush (61% vs. 28%), while a majority or a plurality in the other regions will vote for Bush.

Investors who are union members, Hispanic, and African American are more likely to vote for Kerry, while those who do not belong to unions and whites are more likely to vote for President Bush. Kerry enjoys the support of all the education groups, except those with some college who are more likely to support Bush.

Both Kerry and Bush receive equal amounts of support (54% each) from their respective strongholds -- blue states for Kerry and red states for Bush -- while Kerry's support in red states (41%) is noticeably higher than Bush's support in the blue states (34%). Kerry enjoys firm support among Democratic investors (88%), as does Bush among Republican investors (82%), while more independents say they support Kerry (48%) than Bush (34%).

Bush has firm support among fiscal (71%) and social (60%) conservatives and believers in the free-market (58%), while Kerry has the committed support of social activists (77%), populists (50%), and social liberals (91%). Economic victims -- those who have lost a job to downsizing (57%) or outsourcing (67%), those who are afraid of losing their jobs (65%), and those who are now working at a job that pays less than their immediate previous job (57%) are strongly in support of the Democrat John Kerry. Those who have not been an "economic victim" are either evenly divided in support for Kerry and George W. Bush, or are slightly in support of Bush.

Women are notably more in favor of Kerry (51%) than Bush (42%), while support for the candidates among men is more evenly divided -- 44% Kerry vs. 47% Bush. Among the income groups, only a majority of those earning less than $15,000 a year would vote for Bush, while a plurality or majority in most of the other income groups would vote for Kerry. The candidates are virtually tied among those earning the highest income -- 48% Kerry; 47% Bush.

If the election for President were held today and the candidates were Democrat John Kerry, Republican George W. Bush, and Independent Ralph Nader, for whom would you vote?

• Bush: 47%
• Kerry: 43%
• Nader: 6
• Not sure: 4

Generally, Nader draws support from Kerry in most sub-groups. Kerry is especially hurt in the East (he loses 6 points, while Bush remains the same). Bush retains his support among whites, Hispanics, and African Americans, while Kerry loses 4 points among whites and 8 points among African Americans.

Kerry loses 3 Democratic points and 4 independent points, while Bush's support in those groups remains virtually unchanged. Among ideological groups, with Nader in the race, Kerry loses 9 points among populists and 5 points among social liberals. Again, Bush remains the same or gains slightly in some groups.

In a three-way race, Kerry loses 3 points among men and 1 among women and he loses a few points in most of the income groups.

What are the two most important financial issues facing the United States today?

• Health care costs: 9%
• Outsourcing jobs overseas: 8%
• Budget deficits: 7%
• Continued loss of manufacturing jobs: 5%
• Level of personal income taxes: 3
• Consumer confidence: 2%
• Fluctuations in stock market: 1%
• Level of business taxes: 1%
• Corporate governance: 1%
• Interest rates: 1%
• Complexity of tax code: <1%
• CEO compensation levels: <1%
• *Other: 62
• Not sure/None: 2

* Other: War in Iraq/war on terrorism/national security (400) 44%; Economy/outsourcing (253) 28%; Education (45) 5%; International relations/Foreign policy (43) 5%; Employment (38) 4%; Domestic politics/honesty in government (32) 4%; Moral decline (29) 3%; Environment/ecology (25) 3%; Healthcare (19) 2%; 1% each: Abortion/pro life (10); Social Security (7); Homosexual marriages (5)

Do you expect to do better financially under a Bush presidency or under a Kerry presidency?

• Bush presidency: 43%
• Kerry presidency: 34%
• Not sure: 23%

A plurality (43%) of respondents think they would do better financially with George W. Bush as president, one in three (34%) think they would do better under Kerry and about one in four (23%) are not sure.

Self-identified investors are much more likely to expect to do better under a Bush presidency than a Kerry presidency -- 49% to 33% -- while, those who do not identify themselves that way are more evenly divided, with slightly more expecting to do better under Kerry (36%) than Bush (33%).

A plurality of those 30 and older say they would expect to do better financially under a Bush administration, while those under 30 are evenly divided. Southerners and Westerners are much more likely to expect to do financially better under Bush than under Kerry, while Easterners are much more likely to expect the opposite. Midwesterners are more or less divided, with slightly more saying they would expect to do better under a Bush administration than under a Kerry administration.

Whites are noticeably more likely and Hispanics somewhat more likely to expect to do better financially if Bush is president than if Kerry were president, while African Americans are six times more likely to say they would do better financially with Kerry in office than with Bush in office.

Men are much more likely than women to expect to do better under Bush (48%) than under Kerry (31%), while women are evenly divided (38% Bush; 37% Kerry).

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April 2004 Methodology and Sample Characteristics

Zogby International conducted interviews of 652 likely voters who own some sort of stock, chosen from a combination of random nationwide calls and prescreen self-identified stock owners from a Zogby internal database. All calls were made from Zogby International headquarters in Utica, N.Y., from 4/19/04 through 4/20/04.

The margin of error is +/- 3.9 percentage points. Slight weights were added to region, party, age, race, gender, and 2000 presidential vote to more accurately reflect the sample population. Margins of error are higher in sub-groups.

*Numbers have been rounded to the nearest percent and might not equal 100.

Methodology June 2004 Poll

Zogby International conducted interviews of 950 likely voters chosen at random nationwide. Of these likely voters, 636 own some sort of stock. All calls were made from Zogby International headquarters in Utica, N.Y., from 6/2/04 through 6/5/04. The margin of error is +/- 3.2 percentage points. Slight weights were added to region, party, age, race, religion, gender, and 2000 presidential vote to more accurately reflect the voting population. Margins of error are higher in sub-groups. Numbers have been rounded to the nearest percent and might not total 100.

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