Poll Demonstrates Americans Are Optimistic About MarketBy Richard Morin
The Washington Post
Who's afraid of another Black Monday stock market collapse? Certainly not Charles Severance, a 50-year-old utilities engineer living in Green Bay, Wis. "I don't see the market crashing," he said. "It's a good time to buy stocks."
Jennifer Ostermeier agrees. "I don't anticipate any so-called Black Monday any time soon," said the 29-year-old Chicago public affairs specialist.
"I don't feel any impending sense of doom," said Daniel Hero, 31, an industrial radiographer who lives in Portland, Ore.
Neither do most Americans, according to a new Washington Post-ABC News national survey. Fewer than one in five predict a market crash in the next few years similar to the one that erased about 20 percent of the value of stocks on Monday, Oct. 19, 1987. Fewer than half could even remember what happened on Black Monday.
The poll results are significant because they suggest that Americans are not "irrationally exuberant," but are realistic in their expectations for the market and seem to understand that stocks offer risk as well as potential profit.
In the public's mind, the bloom is clearly off the decade-long market boom that rose out of the ashes of Black Monday. The number of Americans who say stocks are a "risky" investment has increased substantially in recent months, according to the poll. Half of those interviewed believe the stock market "is out of step with the economy." And four in 10 investors say that stocks are overpriced.
A total of 1,515 randomly selected adults were interviewed for this survey, which was conducted Oct. 9-13. The margin of sampling error for the overall results is plus or minus 3 percentage points.
The poll results and follow-up interviews with selected survey participants suggest that Americans remain cautiously optimistic about the direction of the market over the next two years. They think the best of the bull market has passed. But they also believe there's enough value left in the market to reward patient and smart investors.
Half of those interviewed said they expected the stock market to go up in the next year, while four in 10 believe the market will go down.
But neither the bulls nor the bears expect major movement. Among those who thought the market would go up, nearly all said they expected the increase to be small. Similarly, two out of three market pessimists predicted only a modest decline.
"The market should go up," said Constance Martin, 56, a stock owner and customer service representative for a trucking company. "Not that high, but it should go up, because of the economy."
"I think the fundamentals are there," agreed utilities engineer Severance. "I think the earnings are there. I think our productivity gains are creating the reason for the run-up in the stock market."
Others aren't so sure. "I believe there might be a correction" in the market, said Mark Merdinyan, 48, a disabled professor of commercial fisheries who lives in North Kingston, R.I. and does not now own stocks. "That would definitely be common-sensical. It's very high."
Ryan Sutter, 24, a computer programmer and stock investor living in Bloomington, Minn., said he's waiting for a decline so he can buy more stocks. "I'd put money in because I know it would eventually go back up," he said. "I think actually if it went down, that would probably be a good thing. I'm thinking long-term, thinking more for my retirement than the immediate financial gains right now."
Most stock owners aren't so bold - or so patient. Seven in 10 stock owners interviewed said they'd leave their investments "where they are" if the market went down. However, those who said they'd put in more money outnumbered those who would take money out by a 2 to 1 margin. The notion of "buying on the dips" has been ingrained in investors by the market's frequent swift rebounds from temporary drops since the 1987 crash.
While most investors think the market will go up at least a little, even many optimists are wary. Fewer than half of those interviewed believed that now is a particularly good time to buy stocks. And the percentage of Americans wary of stocks as an investment has increased significantly in the past few months.
Nearly seven in 10 respondents - 69 percent - characterized stocks as a risky investment, up from 54 percent in August. Four in 10 said they thought the prices of stocks generally were too high, relative to the real worth of the companies. That view was more likely to be expressed by stock owners than by people who didn't own stock.