Transcript Wave 7 - BetterInvesting

Voice of the American Shareholder
Quarterly Poll – Wave 7
Prepared for:
BetterInvesting
Final Report
December 9, 2005
Table of Contents
Study Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Overview of Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Major Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Detailed Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
What Does A Typical Shareholder Look Like, and How do they Behave?. . . . . . . . . . . . . . . . . . . 22
How Do Shareholders Feel about the Economy and Stock Market? . . . . . . . . . . . . . . . . . . . . . . . 31
What are the Effects of Energy Costs and Health Care Costs on Investors? . . . . . . . . . . . . . . . . . 49
What do Shareholders Think About the Economic Impact of Hurricanes Katrina and Rita?. . . . . . 54
What do Investors Think of the Bush Administration and the 2008 Presidential Election? . . . . . . 60
How do Shareholders Feel about Energy Prices and Consumption? . . . . . . . . . . . . . . . . . . . . . . . 64
How do Investors Feel About the Real Estate Market?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69
What do Investors Think About Investing in 2006? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Demographics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Detailed Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .95
2
Study Objectives



BetterInvesting commissioned Harris Interactive to conduct a series of
research studies to better understand the attitudes and behaviors of
American investors. This study represents the seventh wave of research
conducted for BetterInvesting. The previous waves were conducted in
September 2003, January 2004, May 2004, November 2004, February 2005,
and June 2005.
By regularly reporting on these findings, BetterInvesting expects to capture
the Voice of the American Shareholder.
The survey questions are designed to measure a few key trends in
shareholders’ portfolios and investing behavior as well as to understand
shareholders’ attitudes and views toward current issues. Specifically, this
wave of research focused on the following topics:





Investment profile, goals, strategy, and future plans;
Views toward the stock market and outlook for 2006;
Perceptions of real estate investments and politics;
Views toward energy prices and consumption; and,
Economic effects of Hurricanes Katrina and Rita
3
Overview of Methodology
 Sample includes 1,006 shareholders defined as U.S. adults aged 18 or
older who currently own individual stocks or stock mutual funds.
 Interviewing was conducted between October 12 and 24, 2005.
 The interview averaged 10 minutes in length.
 All interviewing was conducted online using the Harris Poll Online
(HPOL) database consisting of several million members who have
agreed to participate in survey research.
4
Executive Summary
5
Executive Summary
This series of research has tracked key measures of investor behavior and
attitudes since September 2003. Over this time, investors have
demonstrated consistency in their overall investment strategy.




In each wave of research we find that large majorities of investors do not plan to
make changes to their portfolios.
Shareholders maintain a moderate level of risk in their investment portfolio.
Investors recognize the long-term value of stocks and consistently indicate that if
they had a sum of money to invest, they would invest roughly half in individual
stocks or stock mutual funds.
Investors are prompted to make changes to their portfolio as a result of things that
have a direct impact on them personally.


For example, planning for retirement and the cost of living including health care costs and
energy costs.
Investors would recommend that new investors maintain a diversified portfolio, save
more of their pay in their 401(k) plan and understand the range of investment
options available to them.
6
Executive Summary (continued)
 However, while investors recognize the benefits of stocks and
stock mutual funds and seem to be in this for the long-term, they
do express ongoing concern about the economy and stock market.
 The BetterInvesting Shareholder Confidence Index is at an all-time low at just
1.2 (on a scale from -100 to +100 where 0 is the midpoint).
 The proportion of investors who believe the US economy is moving in the
right direction is at its lowest level since September 2003.
 Fewer think it’s a good time for new investors to get involved in the stock
market and increasing numbers think it’s a good time to move money into
safer, lower risk investments.

While men continue to have greater confidence than women, their confidence has
also dropped over time.
 As compared to November 2004, more think inflation and unemployment will
increase and that the stock market and home values where they live will
decrease in 2006.
7
Executive Summary (continued)
Further influencing investor attitudes and behavior are energy prices and
the impact of Hurricanes Katrina and Rita.
Many indicate that they are saving or investing less because of energy prices they
pay.
Roughly the same proportion indicates that energy prices would influence them to
change their portfolio a great deal or a fair amount.
Seven in ten report that they have changed their behavior or spending habits because
of current energy prices.
However, investors also indicate that they think the energy industry is currently
considered the top investment.
And though most do not plan to change their investment strategy because of
Hurricanes Katrina and Rita, they do think that the damage to oil rigs and refineries, the
impact of shipping on the Gulf Coast and government spending on the recovery effort
will impact the stock market.
8
Executive Summary (continued)
 Like many Americans, the war in Iraq is also something investors are
concerned about.
 Nearly half say that the government should reduce spending for the war in Iraq
or pull out of Iraq as a way to pay for hurricane recovery efforts.
 A stable government in Iraq is the top thing investors would wish for, nearly
double the proportion who wished for this last year.
9
Major Findings
10
What does the typical American shareholder look like, and how do
they behave?
 Among investors, the top two most owned investments are
individual stocks (70%) and stock mutual funds (67%)
 Individual retirement accounts controlled by the investor (59%) and individual
retirement accounts through an employer (47%) are also common investments.
 Most investors plan to make no change to their investments over the
next six months, a finding that is consistent since the inception of
this research.
 As in previous waves, almost four in ten (39%) plan to increase their cash
holdings. Men are more likely to increase their investments in cash (44%) than
women (32%).
 Men are also twice as likely as women to indicate they will increase their
investment in bonds (11% of men and 5% of women).
 The average investor has a portfolio that is moderately risky.
 Men are more likely to say their investments are very risky (43%) compared to
women (26%).
11
How do shareholders feel about the economy and stock market?
 Confidence in the U.S. economy continues to fall, from a high of 71% in
January 2004 to a current low of 46% who have a great deal or a fair
amount of confidence that the economy is moving in the right direction.
Compared to a year ago, confidence in the economy is down 9
percentage points.
 While confidence has fallen among both men and women, men (50%) still have
more confidence than women (39%).
 Fewer than four in ten (38%) investors believe it’s a good time for new
investors to get involved in the stock market. This is the lowest level of
support for this attitude since September 2003 (62% agree).
 Fewer men (41%) and women (34%) believe it’s a good time for new investors to
invest, compared to 49% and 40% respectively, in May 2005.
 Even fewer (29%) believe stocks are a better bargain now than they were one year
ago. Both men and women agree at similar rates (29% each).
 Nearly half (49%) of investors believe it’s a good time to move money
into safer, lower risk investments, a record high for this series of
research.
 For the first time, more than half (55%) of women feel it’s a good time to move
money into safer investments. Nearly half (45%) of men agree.
12
How do shareholders feel about the economy and stock market?
(cont.)
 The BetterInvesting Index has reached an all-time low, currently at
+1.2. This indicates that the average shareholder has lost
confidence and holds a view of the market that is tenuously positive.
 The Index indicates that women (-5.1) are less confident compared with men
(+5.2) and that older investors (65+ = -8.9) are less confident compared to
younger investors (35 or less= +8.3).
 The best investments in the current economy are energy (46% top
three), real estate (37%) and pharmaceutical (35%).
 The largest increase has been in the energy industry, rising from 32% in
November 2004 to 46% today.
 Two-thirds of investors who say energy is the best investment today indicate
the potential growth of the industry as the top reason.
 Topping the list of worst investments are the automotive industry
(44% top three), travel (36%) and government (29%).
 Of those who say automotive is the worst industry, more than half (57%) say
their costs are out of control.
 Compared to 2004, more shareholders say the automotive industry is not a
potential growth industry (37% v. 21%) and their services and products
are out of date (27% v. 12%).
13
What are the effects of energy costs and health care costs on
investors?
 While fewer investors report that health care costs are impacting
their ability to save or invest, many (58%) indicate energy costs have
caused them to save or invest less.
 Both men (57%) and women (60%) say they are saving less because of energy
prices.
 Taken together, a majority of investors (62%) indicate that either health care
costs or energy costs are causing them to save or invest less.
 Factors most likely to prompt changes in investors’ portfolios are
things that affect them personally including the economy (62%),
retirement needs (61%) and energy prices (58%).
 Factors that are less likely to prompt investors to change their investments
include the War in Iraq (29%), Hurricanes Katrina and Rita (26%) and the
unemployment rate (23%).
14
What do shareholders think about Hurricanes Katrina and Rita?
 While most investors will not change their investments as a result of
the hurricanes (82% not likely), many do see an impact to the stock
market.
 Majorities of investors say the stock market will be affected as a result of
damage to oil rigs and refineries (85%), shipping along the Gulf Coast (76%)
and government spending on the recovery efforts (78%).
 A majority of investors (87%) say the hurricanes did have a direct
impact on the economy.
 Inflation is the most commonly mentioned (54%) effect of Hurricanes Katrina
and Rita.
 When asked what steps the government should take to reduce
recovery costs, nearly half (47%) of investors think the government
should reduce expenses in Iraq or pull out.
 As a result of the hurricanes, 83% of investors say the construction
industry is a good investment.
 Insurance (55%) and travel (51%) top the list of worst investments following the
hurricanes.
15
What do investors think of the Bush administration and the 2008
presidential election?
 A majority of investors (62%) think the Bush administration hurt
them.
 Women (69%) are more likely than men (58%) to say Bush had a negative
impact on investors. The same holds true for Democrats (89%) and
Independents (70%) as compared to Republicans (30%).
 Senator John McCain (20%), Senator Hillary Rodham Clinton (19%)
and Former Mayor Rudolph Guiliani (18%) would lead the pack if the
2008 presidential election were held today.
 Investors say Guiliani (16%) would likely enact the best policies for investors
while Rodham Clinton (26%) would bring about the worst policies for investors.
16
How do shareholders feel about energy prices and consumption?
 Nearly half (49%) of investors continue to feel oil prices will increase.
This is down slightly from May 2005, when 54% felt this way.
 Almost seven in ten (69%) investors have made some change in their
spending behavior or investment strategy as a result of current
energy prices.
 Younger investors (35 or less) are more likely to reduce spending in other
areas (61%) and nearly half have considered buying a more fuel efficient or
hybrid car (48%).
 Almost half of shareholders (47%) hold major oil companies
primarily responsible for current energy prices.
 Older investors (65 or older: 51%) are more likely than younger investors (35
or less: 40%) to hold major oil companies responsible.
17
How do investors feel about the real estate market?
 More than half of investors (57%) believe real estate is a good
investment.
 About four in ten (43%) believe real estate is a better investment than it was
one year ago, but only 22% believe it will be better one year from now.
 Over one-third (35%) of investors are currently invested in some type
of real estate.
 Residential rental properties top the list of investments (16%), with vacation
residences (13%) and R.E.I.T.’s (10%) rounding out the top three investments.
 Men are slightly more likely (37%) than women (32%) and older investors (65
or older: 41%) are more likely than younger investors (35 or younger: 25%) to
own real estate as an investment.
18
What do investors think about investing in 2006?
 More than three-in-four investors (78%) predict that the market will
improve or stay about the same in 2006.
 However, compared to predictions investors made about the second half of 2005,
significantly fewer investors believe the market will improve in 2006 (26% vs. 36%
who thought the market would improve during the second half of 2005).
 Paying off debt and saving for retirement are the two most important
financial goals for 2006.
 Young adults, 35 or less, are less concerned with saving for retirement (8%) as
compared to middle-aged shareholders (36-49 year olds: 30%) and 65+
shareholders (17%).
 Large majorities of investors predict that the costs for daily expenses
such as energy (86%), food (85%) and gasoline (84%) will be on the rise
in 2006.
 Compared to last year, investors express concern about other economic
indicators as well.
 Nearly eight in ten (78%) investors think inflation and interest rates (78%) will
increase. More than one-third (34%) believe the stock market will decrease in the
19
next year.
What do investors think about investing in 2006? (cont.)
 A stable government in Iraq (22%) and gasoline at $2.00 per gallon
(22%) tie as the number one gift investors would like to receive this
holiday season.
 Compared to last year’s holiday season, the percentage of investors who
would like a stable government in Iraq nearly doubled. Women (27%) more
than men (19%) indicated a stable Iraqi government would make the best
holiday gift.
 Investors of all ages, but particularly those 65 and older, are likely to
recommend that new investors have a more diversified portfolio,
save more in a 401(k) plan and be aware of alternatives within their
retirement plan.
20
Detailed Findings
21
What Does the Typical American Shareholder Look
Like, and How Do They Behave?
22
The typical investor has more money invested in stock mutual funds than
individual stocks.
Total Amount Invested in Individual Stocks and Stock Mutual Funds
Individual Stocks (%)
Stock Mutual Funds (%)
Jan ‘04
May ‘04
Nov ’04
Feb ‘05
May ‘05
Oct ’05
Jan ‘04
May ‘04
Nov ‘04
Feb ‘05
May ‘05
Oct ‘05
Less than
$5,000
41
41
36
42
29
30
30
32
25
30
19
20
$5,000 $9,999
10
9
12
9
8
7
8
10
6
5
7
6
$10,000 $49,999
20
28
20
25
24
26
29
31
25
32
23
25
$50,000 $99,999
9
7
6
7
10
8
9
11
13
14
16
12
More than
$100,000
19
15
13
17
23
20
24
16
15
18
25
27
$108,900
$64,200
$63,400
$156,200
$146,200
$190,800
$84,100
$56,300
$67,900
$94,400
$103,000
$184,000
$7,000
$8,350
$5,700
$8,700
$14,000
$12,100
$19,000
$14,640
$16,160
$17,400
$35,000
$31,300
MEAN
MEDIAN
Q1541: You mentioned that you have the following investments. About how much do you have invested in the following…?
Base: All Shareholders (n=1,006)
23
Shareholders maintain a wide variety of investments.
Types of Investments Owned
Sept. ‘03
Jan ‘04
May ‘04
Nov ‘04
Feb ‘05
May ‘05
Oct ’05
%
%
%
%
%
%
%
Individual stocks (not including stock options or
restricted stocks from the company that I work
for)
70
71
67
66
67
69
70
Stock mutual funds
68
67
70
69
72
69
67
Individual retirement account that I control (i.e.,
IRA, KEOGH, SEP)
54
56
51
52
59
56
59
Individual retirement accounts through my
employer (i.e., 401(k) retirement savings plan
or 403(b) retirement savings plan, or profit
sharing plan)
49
52
52
50
51
51
47
Bonds or bond funds
34
33
35
35
37
36
34
Stock options or restricted stocks from the
company that I work for
12
15
17
12
12
15
9
Other type of investment not mentioned
24
21
21
25
25
26
28
Q430: Please indicate which types of investments or investment accounts you personally have. Do you currently have . . .?
Base: All shareholders (n=1,006)
24
For the most part, shareholders plan to make no changes to their
investments over the next six months.
Plans for Investments Over The Next Six Months
Increase (%)
2004
Make No Change (%)
2005
2004
Decrease (%)
2005
2005
2004
Jan
May
Nov
Feb
May
Oct
Jan
May
Nov
Feb
May
Oct
Jan
May
Nov
Feb
May
Oct
Individual stocks
34
26
29
28
25
26
62
67
63
64
67
65
5
7
8
8
8
9
Stock mutual
funds
31
24
24
28
23
22
64
71
69
68
69
69
5
5
7
4
8
9
Individual bonds
6
8
8
8
11
8
89
88
85
87
84
88
5
3
6
5
5
5
Bond mutual
funds
10
11
11
11
12
9
84
84
83
85
83
86
5
5
6
3
5
5
Cash
39
38
38
35
40
39
52
54
52
55
52
53
9
8
10
10
8
8
Alternative
investments
8
5
7
8
8
5
90
92
89
88
87
91
2
2
4
4
5
4
Other
investments not
mentioned
15
16
15
15
17
15
83
81
81
82
81
82
2
3
3
3
3
3
Q610: Again thinking about your investment portfolio, over the next six months, do you plan to increase, decrease or make no
change in your investments in each of the following?
Base: All shareholders (n=1,006)
25
Three in ten men plan to increase their investment in individual stocks
and more than four in ten plan to increase their investment in cash
compared to 18% and 32% of women, respectively.
Plan to Increase Investments Over The Next Six Months By Gender
Increase (%)
Total
Male
Female
Individual stocks
26
30
18
Stock mutual funds
22
27
15
Individual bonds
8
8
7
Bond mutual funds
9
11
5
Cash
39
44
32
Alternative investments (such
as hedge funds, private
equity and managed futures)
5
6
3
Other investments not
mentioned
15
18
11
Q610: Again thinking about your investment portfolio, over the next six months, do you plan to increase, decrease or make no
change in your investments in each of the following?
Base: All shareholders (n=1,006; Male=628; Female=378)
26
Whether they have $10,000 or $100,000 to invest, shareholders would
continue to invest roughly half in stock mutual funds and individual
stocks.
Percentage Allocated to Each Investment
Have $10,000 to Invest
Have $100,000 to Invest
Total (Mean)
Total (Mean)
Jan ‘04
May ‘04
Feb ‘05
May ‘05
Oct ‘05
Jan ‘04
May ‘04
Feb ‘05
May ‘05
Oct ’05
Individual stocks
32
26
26
26
29
27
25
24
24
21
Stock mutual
funds
26
27
27
21
25
27
27
28
24
24
Cash
14
16
14
16
14
13
15
14
14
19
Bond mutual
funds
10
10
10
10
9
9
10
10
12
11
Individual bonds
6
5
6
7
6
6
6
7
8
7
Alternative
investments
3
3
4
3
5
5
5
5
5
4
Other investments
7
11
12
14
9
13
13
12
12
14
Q515: If you had $10,000/$100,000 to invest, how much would you invest in each of the following?
Base: All shareholders (n=1,006)
Note: For this question, half of all respondents were asked to allocate $10,000 across the investments listed above and the
other half were asked to allocate $100,000 across the investments listed above.
27
Shareholders’ investments are a mix of risk levels but, on average,
are moderately risky.
Risk Level of Current Investments
MEAN =
38%
36%
35%
Sept ‘03 Jan ’04
4.0
4.1
May ’04
3.9
Nov ’04 Feb ’05
3.9
3.9
37%
36% 37%
34% 34%
32%
31%
30%
Sept '03
May '04
Oct ‘05
3.9
36%
30%
30%
27%
Moderately Risky (4)
Jan '04
34% 34% 34%
33%
32%
28%
Very Risky (5, 6, 7 Net)
May ’05
4.0
Nov '04
Not Risky (1, 2, 3 Net)
Feb '05
May '05
Oct '05
Q605: Investment risk is typically defined as a greater likelihood that your portfolio may lose value but is often associated with higher returns. On a
scale from 1 to 7, in which “1” represents “not risky at all” and a “7” represents “very risky”, how would you characterize most of your investments?
Base: All shareholders (n=1,006)
28
The risk level of investments across the past two years has remained
relatively constant at about 4.0, indicating an investment strategy that has
a moderate level of risk.
Mean Risk Level of Investments
Very Risky
7
6
5
4
4.1
4
4
3.9
3.9
3.9
3.9
Mean Risk
Level
3
2
Not at all
Risky
1
Sept
'03
Jan
‘04
May
‘04
Nov
’04
Feb
‘05
May
‘05
Oct
’05
Q605: Investment risk is typically defined as a greater likelihood that your portfolio may lose value but is often associated with higher returns. On a
scale from 1 to 7, in which “1” represents “not risky at all” and a “7” represents “very risky”, how would you characterize most of your investments?
Base: All shareholders (n=1,006)
29
Slightly more than four in ten male shareholders characterize their
investments as risky while less than 3 in 10 female shareholders
do the same, a finding that has held over time.
Risk Level of Current Investments By Gender
Sept ’03
Jan ’04
May ’04
Nov ‘04
Feb ‘05
May ‘05
Oct ’05
%
%
%
%
%
%
%
36
38
35
34
34
36
37
Men
42
45
41
43
40
40
43
Women
27
28
27
24
27
30
26
Moderately Risky (4)
30
32
28
31
32
30
27
Men
29
28
26
28
30
28
27
Women
31
38
32
35
35
32
28
33
30
37
34
34
34
36
Men
28
27
33
29
30
32
30
Women
41
33
41
41
39
33
45
4.0
4.1
3.9
3.9
3.9
4.0
3.9
Men
4.2
4.2
4.0
4.2
4.1
4.0
4.1
Women
3.7
3.9
3.8
3.6
3.7
3.8
3.5
Very Risky (5, 6, 7) (Net)
Not Risky at All (1, 2, 3)
(Net)
Mean
Q605: How would you characterize most of your investments on a scale from “not risky at all” to “very risky”?
Base: All shareholders (n=1,006)
30
How Do Shareholders Feel about the
Economy and Stock Market?
31
Confidence in the U.S. economy has fallen to its lowest level since the
survey began.
Confidence in the U.S. Economy
71%
57%
60%
54% 55%
51%
49%
46%
54%
46% 45%
43%
40%
29%
A Great Deal/A Fair Amount (Net)
Sept '03
Jan '04
May '04
Not Much/None At All (Net)
Nov '04
Feb '05
May '05
Oct '05
Q410: How much confidence do you have that the United States’ economy is generally moving in the right direction?
Base: All shareholders (n=1,006)
32
Just half of men now have confidence in the economy, a drop of 5 percentage
points since May and is at its lowest level since September 2003.
Confidence in U.S. Economy By Gender - A Great Deal/Fair Amount (Net)
Total
Men
Women
75%
71%
57%
62%
60%
65%
63%
57%57%
55%
54%55%
49%
50%
50%
53%
53%
50%
46%
40% 39%
Sept '03
Jan '04
April '04
Nov '04
Feb '05
May '05
Oct '05
Q410: How much confidence do you have that the United States’ economy is generally moving in the right direction?
Base: All shareholders (n=1,006)
33
Continuing the downward trend from May, fewer than four in ten
shareholders agree it’s a good time for new investors to get involved in
the stock market.
“It’s a good time for new investors to get involved in the stock market.”
62%
51% 50% 50%
45%
38%
24%
30%
26%
25% 27%
33%
23% 24%
15%
Strongly/ Somewhat Agree
Jan. '04
Neither agree nor disagree
May '04
Nov '04
Feb '05
Q601: How strongly do you agree or disagree with each of the following statements?
Base: All shareholders (n=1,006)
29% 29%
20%
Strongly/ Somewhat Disagree
May '05
Oct '05
34
The numbers of men and women who think it’s a good time for new
investors to get involved in the stock market are at their lowest levels
since the survey began.
% Strongly/Somewhat Agree:
“It’s a good time for new investors to get involved in the stock market.”
66%
62%
56% 54%
51% 50% 50%
56%
50% 49%
50%
44% 45%
45%
41%
38%
34%
Total
Men
Jan. '04
40%
April '04
Nov '04
Women
Feb '05
Q601: How strongly do you agree or disagree with each of the following statements?
Base: All shareholders (n=1,006)
May '05
Oct '05
35
Less than three in ten agree that stocks are a better bargain than a
year ago. A plurality neither agree nor disagree with this
statement.
“Most stocks are a better bargain now than they were one year ago.”
43% 41%
38%
37%
35%
29%
29%
Strongly/ Somewhat Agree
Jan. '04
44%
41%
33%
26% 26%
Neither agree nor disagree
May '04
Nov '04
Feb' 05
Q601: How strongly do you agree or disagree with each of the following statements?
Base: All shareholders (n=1,006)
31% 33%
26%
29% 30% 28%
Strongly/ Somewhat Disagree
May '05
Oct '05
36
Male and female shareholders are equally likely to agree that
stocks are a better bargain now than they were one year ago.
%Strongly/Somewhat Agree:
“Most stocks are a better bargain now than they were one year ago.”
43% 41%
29%
39%
38%
37%
35%
29%
26% 26%
Total
29%
26%
31% 33%
Men
Jan. '04
May '04
Nov '04
33% 35%
26%
29%
Women
Feb' 05
Q602: How strongly do you agree or disagree with each of the following statements?
Base: All shareholders (n=1,006)
May '05
Oct '05
37
The proportion of shareholders who agree that it’s a good time to move
money into safer investments continues to increase, with nearly half now
holding this belief. Only one in five disagree with this statement.
“It’s a good time to move money into safer, lower risk
investments from higher return/higher risk investments.”
47% 49%
40%42%
37%
34%
36%
32%32%
32%
29% 30%
35%
30%
24%26%24%
21%
Strongly/ Somewhat Agree
Jan. '04
Neither agree nor disagree
May '04
Nov '04
Feb '05
Q601: How strongly do you agree or disagree with each of the following statements?
Base: All shareholders (n=1,006)
Strongly/ Somewhat Disagree
May '05
Oct '05
38
The proportion of men and women who think it’s a good time
to move money into safer investments continues to increase
and for the first time, more than half of women feel this way.
% Strongly/Somewhat Agree:
“It’s a good time to move money into safer, lower risk investments from
higher return/higher risk investments.”
55%
47% 49%
34%
37%
40%
46%
42%
39% 40%
49%
45%
44%
40%
41%
44%
33%
29%
Total
Jan. '04
Men
April '04
Nov '04
Women
Feb '05
Q601: How strongly do you agree or disagree with each of the following statements?
Base: All shareholders (n=1,006)
May '05
Oct '05
39
The BetterInvesting Index of Shareholder Confidence continues to
fall, dropping to + 1.2.
100
October 2005
Component Scores for Each Item
Included in BetterInvesting Index
80
60
40
19.3
20
10.9 9.3 7.8
5.0
1.2
0
-20
-40
Positive
Neutral
Negative
Component
Scores
Q410
8.6
78.5
12.9
-4.2
Q611a1
25.7
65.1
9.2
16.5
Q611a2
22.2
68.9
8.9
13.3
Q605
36.6
27.2
36.2
0.4
Q602a1
21.2
29.7
49.0
-27.8
Q602a2
28.8
43.7
27.5
1.2
Q602a3
38.0
32.8
29.2
8.8
Question
Jan May Nov Feb May Oct
'04 '04 '04 '05 '05 '05
October 2005
BetterInvesting
INDEX
+1.2
S=
8.3
BetterInvest
ing Index=
1.2
-60
-80
-100
Note: The BetterInvesting Index was calculated based on 7 components that reflect shareholder confidence in the
economy and stock market and is rated on a scale from -100 to +100 where 0 is the midpoint. A more detailed
explanation of the Index is found in the Detailed Methodology.
40
While shareholders’ confidence has declined among both men and women, men
continue to have a more positive outlook (though less so than previously) than
women.
Male
100
Female
100
80
80
60
60
40
40
24.3
20
19.8
13.9
8.6
8.6
20 13.4
5.2
-40
-60
-80
3.4
6.9
-0.4 -5.1
0
0
-20
7.3
Jan May Nov Feb May Oct
'04 '04 '04 '05 '05 '05
-20
Jan
'04
May
'04
Nov
'04
Feb
'05
May
'05
Oct
'05
-40
-60
-80
-100
-100
Note: The BetterInvesting Index was calculated based on 7 components that reflect shareholder confidence in the
economy and stock market and is rated on a scale from -100 to +100 where 0 is the midpoint. A more detailed
explanation of the Index is found in the Detailed Methodology.
41
The Index decreases with age and indicates a negative view of the
market among older shareholders.
Index Scores by Age Groups
Index Scores
Question
Jan. ‘04
May ‘04
Nov. ‘04
Feb. ‘05
May ’05
Oct. ‘05
35 or less
22.5
18.8
17.0
16.5
15.1
8.3
36-49
24.0
15.9
15.6
7.8
8.5
5.8
50-64
18.5
14.1
6.8
4.6
1.1
0.4
65+
13.9
2.1
-1.7
3.7
-4.9
-8.9
Less than 55
23.2
16.5
14.8
10.3
11.1
6.4
55+
14.4
9.8
1.4
4.2
-3.8
-6.2
Note: The BetterInvesting Index was calculated based on 7 components that reflect shareholder confidence in the
economy and stock market and is rated on a scale from -100 to +100 where 0 is the midpoint. A more detailed
explanation of the Index is found in the Detailed Methodology.
42
The Index has declined among Midwestern residents but risen
among those in the West.
Index Scores by Region
Jan. ‘04
May ‘04
Feb. ‘05
May ’05
Oct. ‘05
East
16.8
9.0
7.1
6.3
2.6
Midwest
21.3
14.2
4.1
8.0
-1.0
South
20.3
16.8
9.8
7.2
2.1
West
21.2
18.0
9.3
-2.0
0.5
Note: The BetterInvesting Index was calculated based on 7 components that reflect shareholder confidence in the
economy and stock market and is rated on a scale from -100 to +100 where 0 is the midpoint. A more detailed
explanation of the Index is found in the Detailed Methodology.
43
Many more investors indicate energy is the top industry to invest in
compared to one year ago. Nearly half (46%) say this industry is one
of the best industries to invest in given the current economy.
Best Investments in the Current Economy-Top 3 Mentions
Top 10 Mentions
32%
Energy
46%
39%
37%
42%
35%
Real Estate
Pharmaceutical
27%
Health Care
Technology
32%
30%
19%
Utilities
37%
25%
21%
23%
Information Technology
17%
17%
Banking & Finance
Telecommunications
15%
20%
11%
9%
Food & Beverage
Nov '04
Oct '05
Q620: Thinking of the current economy, please indicate which three of the following industries you think are the best
for investing now.
Base: All shareholders (n=1,006)
44
Energy, real estate, and the pharmaceutical industry make up the
top three best investments, relatively unchanged from 2004.
Best Industry Rankings
Best
Oct ’05
Nov ’04
Energy
1
4
Real estate
2
2
Pharmaceutical
3
1
Health Care
4
5
Technology
5
3
Utilities
6
8
Information Technology
7
6
Banking and Finance
8
9
Telecommunications
9
7
Food and Beverage
10
10
Media
11
13
Retail
12
12
Insurance
13
11
Transportation
14
14
Automotive
15
18
Government
16
15
Education
17
17
Travel
18
16
45
While being in a potential growth industry is the top cited reason
making an industry a good investment, shareholders evaluate
industries on their individual merits.
Why Particular Industry is Among Top 3 Best Investments Now
Nov ‘04
Oct ‘05
Total
Energy
Real Estate
Pharmaceutical
Total
Energy
Real Estate
Pharmaceutical
%
%
%
%
%
%
%
%
They are a potential growth
industry.
64
66
58
68
66
62
65
63
They are developing new
products or services.
39
37
23
48
41
30
25
50
Their past performance
indicates future promise.
43
39
54
45
39
37
47
41
They are a stable industry.
35
34
41
34
35
33
44
29
They are introducing products
to new markets.
31
29
17
35
34
24
21
42
They are using the most
advanced technology.
29
26
20
34
24
16
15
27
They operate effectively in
volatile domestic markets.
24
22
28
24
22
25
21
23
They operate effectively in
volatile international markets.
18
20
17
19
18
20
14
18
They are doing a good job on
containing costs.
9
8
10
7
9
6
8
6
They are prepared to deal with
the terrorism threat.
6
4
4
7
7
7
3
5
Other factors
20
27
21
26
23
27
24
22
46
Q630: What about the industry makes it the best industry to invest in now. Please select all that apply.
Base: All Shareholders, Best/Second/Third Best Investment (n=1,006)
When thinking about the worst industries in which to invest given the current
economy, the automotive industry tops all. More than two times as many
investors consider automotive the worst industry as compared to November
2004.
Worst Investments in the Current Economy
Top 10 Mentions
21%
Automotive
44%
38%
36%
Travel
27%
29%
Government
21%
Transportation
28%
21%
23%
Retail
20%
21%
Insurance
9%
Real Estate
Media
17%
21%
14%
Education
12%
Healthcare
19%
11%
Nov '04
23%
Oct '05
Q635: Once again, thinking of the current economy, please indicate which three of the following industries you think are
the worst for investing now. Please indicate your first choice, second choice and third choice.
Base: All shareholders (n=1,006)
47
The top cited reason why a particular industry is among the worst
investments is that their costs are out of control.
Why Particular Industry is Among Top 3 Worst Investments Now
Nov ‘04
Oct ‘05
Total
Automotive
Travel
Government
Total
Automotive
Travel
Government
%
%
%
%
%
%
%
%
Their costs are out of control.
54
47
70
53
58
57
61
62
They are an unstable industry.
41
36
29
41
42
39
47
40
They are not a potential growth
industry.
38
21
39
30
37
37
35
42
Their past performance
indicates poor future
performance.
34
17
48
29
37
33
35
41
They perform poorly in volatile
domestic markets.
28
21
23
18
30
28
29
34
They are not prepared to deal
with the terrorism threat.
30
13
28
45
25
16
34
28
Their services and products are
out of date.
20
12
19
10
24
27
26
30
They perform poorly in volatile
international markets.
21
11
14
20
21
18
24
29
They are using outdated
technology.
19
20
9
23
21
24
20
27
Other factors
22
11
22
21
26
29
27
24
Q640: What about the [answer from Q606/1] industry makes it the worst industry to invest in now. Please select all that apply.
Base: All Shareholders, Best/Second/Third Worst Investment (n=1,006)
48
What are the Effects of Energy Costs and
Health Care Costs on Investors?
49
As compared to 2004, fewer shareholders are saving or investing
less because of health care costs that they pay.
Impact of Health Care Costs on Ability to Invest
53%
37%
41%
37%
23%
15%
6%
Saving or investing less
Saving or investing the
same amount
November '04
3%
Saving or investing more
No impact
October '05
Q910: Thinking now of the health care costs that you pay, how have these affected your
ability to save or invest? Are you…?
Base: All shareholders (n=1,006)
50
About six in ten shareholders say energy prices have caused them
to save or invest less.
Impact of Energy Costs on Ability to Invest
58%
33%
3%
Saving or investing less
Saving or investing the
same amount
Saving or investing more
Q912: Thinking now of the energy costs that you pay, how have these affected your ability
to save or invest? Are you…?
Base: All shareholders (n=1,006)
6%
No impact
51
The impact of energy costs is affecting men and women at equal
rates.
Impact of Energy Costs on Ability to Invest - by Gender
58% 57% 60%
33% 35% 30%
3%
Saving or investing less
Saving or investing the
same amount
Total
3%
2%
Saving or investing more
Men
Q912: Thinking now of the energy costs that you pay, how have these affected your
ability to save or invest? Are you…?
Base: All shareholders (n=1006); Male (n=628); Female (n=378)
6%
5%
8%
No impact
Women
52
Investors mention the economy as the factor that impacts their
investment strategy most. Other commonly cited factors are their
own personal retirement needs and rising energy prices.
Factors Prompting Changes to Portfolio
A great
deal/A fair
amount
(Net)
Not very
much/Not at
all
(Net)
The economy
%
62
38
My retirement needs
%
61
39
Rising energy prices
%
58
42
Rising interest rates
%
48
52
Rising health care costs
%
45
55
Outsourcing of jobs overseas
%
36
64
The war in Iraq
%
29
71
Hurricanes Katrina and Rita
%
26
74
Unemployment rate
%
23
77
Terrorism
%
19
81
Q935: To what degree is each of the following a factor prompting you to make changes to your investment portfolio?
Base: All shareholders (n=1,006)
53
What do Shareholders think about the
Economic Impact of
Hurricanes Katrina and Rita?
54
The majority of shareholders do not plan on changing their
investment strategy by directly or indirectly investing in industries
which may benefit from the recovery effort.
Likelihood of Changing Investment Strategy Post Hurricanes
%
Extremely/Very likely (net)
5
Somewhat/Not at all likely (net)
82
1% Extremely
likely
4% Very likely
12% Likely
53% Not at all
likely
30% Somewhat
likely
Q1000: How likely are you to change your investment strategy to either directly or indirectly invest in industries that may benefit
from the recovery effort?
Base: All shareholders (n=1,006)
55
Perhaps not surprisingly, construction is the most commonly mentioned industry
investors think will be a good bet during the recovery effort. As far as poor
investments go, insurance and travel top the list.
Good and Poor Investments-Hurricane Recovery
Good
Investment
Poor
Investment
Construction
83
1
Real estate
42
14
Energy
35
14
Utilities
33
15
Banking & Finance
27
11
Telecommunications
27
6
Health care
21
10
Technology
21
3
Transportation
21
18
Pharmaceutical
18
2
Retail
18
24
Information Technology
18
6
Food and Beverage
17
9
Insurance
13
55
Government
12
35
Education
8
12
Automotive
6
22
Media
6
12
Travel
4
51
Q1005/1010: As an investor, which of the following industries do you think will be good/poor investments because of their
involvement with the recovery effort?
Base: All shareholders (n=1,006)
56
Majorities of shareholders agree that the impact to the Gulf Coast economy and government
spending related to the recovery effort will have a great deal or fair amount of impact on the
stock market. Women and older adults are more likely to hold these views.
Effects of Hurricanes Katrina and Rita
% A great deal/fair amount summary
Gender
Age
Total
Men
Women
35 or less
36-64
65+
%
%
%
%
%
%
Damage to oil rigs and oil refineries
85
81
90
90
64
87
Shipping along the Gulf Coast
76
70
86
76
57
84
Government spending on the
recovery effort
78
74
84
65
62
87
Q1015: To what degree do you think the following effects of Hurricanes Katrina and Rita will affect the stock market?
Base: All shareholders (n=1,006); Women (n=378); Men (n=628); 35 or less (n=143); 36-64 (n=665); 65+ (n=198)
57
Shareholders who are likely to change their investment strategy believe the
hurricanes will have a greater negative impact on the economy compared to
those who do not plan to change their investments.
Effects of Hurricane Katrina on the Economy
Hurricane Katrina Effects
Any (Net)
87%
54%
30%
27%
17%
Inflation
Economic growth
A recession
Bursting of the
housing bubble
Q1020: Do you think the effects of Hurricanes Katrina and Rita will result in….? Please select all that apply.
Base: All shareholders (n=1,006)
13%
No impact on the
economy
58
More than anything else, investors think that the government
should reduce Iraq war expenses or pull out of Iraq altogether in
order to fund hurricane recovery efforts.
Government Steps to Reduce Cost of Recovery Effort
9% Increase
budget deficit
14% Increase
taxes
47% Reduce Iraq
war expenses or
pull out
31% Cut back
services in other
areas
Q1025: As an investor, which one of the following do you think the government should do to help pay for these costs?
Base: All shareholders (n=1,006)
59
What do Investors Think of the Bush
Administration and the 2008 Presidential
Election?
60
A majority of shareholders feel the Bush administration has hurt
investors.
Effect of Bush Administration on Shareholders
10% Helped alot
27% Helped a little
36% Hurt alot
Hurt
Helped
(Net)
(Net)
38%
62%
26% Hurt a little
Q1150: In general, do you think George W. Bush’s administration has helped or hurt investors?
Base: All shareholders (n=1,006)
61
Women are more likely than men to think the Bush administration has hurt
investors. Democrats and Independents also share this opinion, while majorities of
Republicans believe Bush has helped investors.
Effect of Bush Administration on Investors
-by Gender and Party Identification
Gender
Party Identification
Total
Men
Women
Democrat
Independent
Republican
%
%
%
%
%
%
Helped (net)
38
42
31
11
30
70
Helped a lot
10
13
6
1
7
22
Helped a
little
27
29
25
10
23
48
Hurt (net)
62
58
69
89
70
30
Hurt a little
26
26
28
31
28
21
Hurt a lot
36
32
41
58
42
9
Q1150: In general, do you think George W. Bush’s administration has helped or hurt investors?
Base: All shareholders (n=1,006); Men (n=628); Women (n=378); Democrat (n=324); Independent (n=312); Republican (n=370)
62
If the 2008 presidential election were held now, one in five investors would vote for Senator
John McCain with Senator Hillary Rodham Clinton and Former Mayor Rudolph Guiliani running
close behind. However, they believe Senator Rodham Clinton will be the worst candidate and
Guiliani the best when it comes to policies for investors.
Potential Candidates and their Effects on Policy
Would Vote For
Best Policies
For
Investors
Worst Policies
For
Investors
%
%
%
Senator John McCain
20
13
2
Senator Hillary Rodham Clinton
19
13
26
Former Mayor Rudolph Guiliani
18
16
5
Senator John Kerry
6
7
11
Former Senator John Edwards
5
5
2
Senator Bill Frist
3
6
11
Former Governor Howard Dean
2
2
9
Retired General Wesley Clark
2
2
8
Governor George Pataki
1
1
3
None of these
16
21
9
Decline to answer
8
15
14
Best Policies for Investors
•Republican: Guiliani (31%)
•Democrat: Clinton (27%)
•Independent: None (28%)
Worst Policies for Investors
•Republican: Clinton (46%)
•Democrat: Frist (22%)
•Independent: Clinton (25%)
Q1155: If the presidential election of 2008 were held today, which one of the following would you vote for?
Q1160: Of the following potential presidential candidates, which one will implement the best policies for investors?
Q1165: Of the following potential presidential candidates, which one will implement the worst policies for investors?
Base: All shareholders (n=1,006); Democrat (n=324); Independent (n=312); Republican (n=370)
63
How do Shareholders Feel about Energy
Prices and Consumption?
64
Roughly half of shareholders expect oil prices to continue to
increase, down slightly from six months ago.
Expectations for Price of Oil
54%
49%
39%
35%
12%
11%
May '05
Increase
Oct '05
Level off
Q1045: Do you expect oil prices to continue to increase, level off or decrease?
Base: All shareholders (n=1,006)
Decrease
65
Seven in ten investors have taken some action as a result of current energy prices. Younger
shareholders (35 or less) and those in the South are more likely to have reduced their spending
or considered a fuel efficient car as a result of current energy prices.
Actions Taken as a Result of Energy Prices
Region
Age
Total
East
Midwest
South
West
35 or
less
36-49
50-64
65+
%
%
%
%
%
%
%
%
%
69
59
65
78
71
74
76
68
58
Reduced my spending in
other areas
50
43
45
61
48
61
52
50
40
Considered purchasing a
more fuel efficient or hybrid
car
35
21
32
46
38
48
33
32
31
Moved more money into
safer investments
15
12
19
19
10
12
17
19
13
Changed my strategy to
either purchase or sell
investments in energy
companies
10
10
9
10
14
10
14
9
8
Invested more in socially
responsible funds or “green”
companies
7
5
7
6
9
9
8
6
3
31
41
35
22
29
26
24
32
42
Any (net)
None of these
Q1050: As an investor, which of the following have you done as a result of current energy prices? Please select all that apply
Base: All shareholders (n=1,006); East (n=227); Midwest (n=253); South (n=285); West (n=241); 35 or less (n=143); 36-49 (n=280);
50-64 (n=385);65+ (n=198)
66
Nearly half of shareholders think major oil companies are primarily responsible for
the current energy prices, a finding that is more true in the Midwest and South.
Responsibility for Current Energy Prices
Region
Age
Total
East
Midwest
South
West
35 or
less
36-49
50-64
65+
%
%
%
%
%
%
%
%
%
Major oil
companies
47
44
51
51
41
40
48
46
51
OPEC
16
20
20
12
14
18
15
13
18
Federal
government
14
13
9
19
14
14
14
20
10
Consumers
12
11
9
13
15
11
16
12
10
War in Iraq
10
12
12
6
14
14
6
9
12
Gas stations
1
-
*
1
2
2
1
*
*
Q1055: From your perspective as an investor, which one of the following do you think is primarily responsible for the current
energy prices?
Base: All shareholders (n=1,006); East (n=227); Midwest (n=253); South (n=285); West (n=241); 35 or less (n=143); 36-49
(n=280); 50-64 (n=385);65+ (n=198)
67
In both positive and negative ways, investors express their views about current
energy prices.
Energy Summary
Total
%
Future of oil
Prices will increase
49
Actions taken as a result of energy prices
Any (Net)
69
Reduced spending in other areas
50
Considered purchasing more fuel efficient/hybrid car
35
Major oil companies are primarily responsible for
current energy prices
47
Energy as top three best investment
46
Energy prices influenced changes to portfolio a great
deal or a fair amount
56
Saving or investing less because of energy prices
58
68
How do Investors Feel About the Real
Estate Market?
69
More than half of investors perceive real estate to be a good investment.
Real Estate as an Investment
14%,
Very good
7%, Poor
36%,
Fair
43%
57%
Fair/
Poor
Very good/
Good
43%, Good
Q1100: As an investor, how would you evaluate real estate as an investment today?
Base: All respondents (n=1,006)
70
While most investors think real estate is a good or a better investment
than one year ago, more than one-third think it will be worse a year from
now.
Predicting the Value of Real Estate Investments
43%
42%
36%
36%
22%
21%
One year ago
Better
12 months from now
About the same
Worse
Q1103: Compared to one year ago, do you think real estate is a better investment, about the same or a worse
investment?
Base: All shareholders (n=1,006)
71
Besides their primary residence, just over one-third of shareholders invest in
real estate including 16% who have residential rental properties, and 13% who
own vacation homes.
Real Estate Investments
Invested in real state
Residential rental
properties
Total
13%
Vacation residence
R.E.I.T. (Real Estate
Investment Trust)
Commercial properties
Not invested in real
estate
%
16%
10%
35
Men
37
Women
32
35 or younger
25
36-49
33
50-64
40
65+
41
6%
65%
Q1111: Not including a home that is your primary residence, in which other kinds of real estate, if any, are you currently
invested?
Base: All shareholders (n=1,006); Men (n=628); Women (n=378); 35 or less (n=143); 36-49 (n=280); 50-64 (n=385); 65+
(n=198)
72
Women are more likely than men to invest in residential rental properties. Middle-aged
investors are also more likely to invest in this type of real estate than the youngest
shareholders.
Type of Real Estate Investments
by Gender and Age
Gender
Age
Total
Men
Women
35 or less
36-49
50-64
65 and
older
%
%
%
%
%
%
%
35
37
32
25
33
40
41
Residential Rental Properties
16
13
19
9
17
19
16
Vacation Residence
13
13
13
11
10
14
20
R.E.I.T.
10
13
4
6
8
10
14
Commercial Properties
6
7
5
8
6
7
5
Any
Q1111: Not including a home that is your primary residence, in which other kinds of real estate, if any, are you currently
invested? Multiple response.
Base: Invested in real estate (n=352); Men (n=225); Women (n=126); 35 and younger (n=53*); 36-49 (n=98*); 50-64
(n=90*); 65 + (n=111)
*small base
73
What do Shareholders think about
Investing in 2006?
74
Nearing 2006, more than half of investors predict the market will stay the
same; one-quarter think it will improve and one-fifth think it will get
worse.
October 2005
Thinking ahead to 2006
May 2005
Thinking Ahead to 2nd Half of the Year
21%,
Worsen
22%,
Worsen
26%,
Improve
36%,
Improve
43%,
Stay about the
same
Q1202: Thinking ahead to 2006, how do you think the market will perform?
Base: All respondents (n=1,006)
51%,
Stay about the
same
75
The top cited financial goal for 2006 is paying off debt, followed by saving for
retirement. Middle-aged shareholders (between 36 and 64) are more concerned
with paying off debt and saving for retirement.
Primary Financial Goals for 2006
Age
Total
35 or less
36-49
50-64
65+
%
%
%
%
%
Pay off debt
31
30
38
37
18
Saving for retirement
24
8
30
39
17
Saving for unexpected purchases
19
22
11
11
32
Saving to make a big purchase,
such as a home, boat, car, vacation
9
23
10
3
3
Saving for a child’s education
5
7
9
2
-
Other
12
9
2
9
29
Q1208: What is your primary financial goal for 2006?
Base: All respondents (n=1,006); 35 or less (n=143); 36-49 (n=280); 50-64 (n=385); 65+ (n=198)
76
Large majorities of investors believe their daily expenses such as energy
prices, cost of food and gasoline/home heating costs will increase in 2006.
Additionally, more believe that inflation and unemployment will increase,
while home values and the stock market will decrease as compared to 2004.
2006 Predictions on Costs and Markets
Oct ‘05
Nov ‘04
Increase
Stay the
same
Decrease
Increase
Stay the
same
Decrease
Energy prices
%
86
6
7
%
n/a
n/a
n/a
Cost of food
%
85
1
14
%
n/a
n/a
n/a
Gasoline or home heating
costs that I pay
%
84
7
9
%
n/a
n/a
n/a
Health care costs that I
pay
%
80
2
18
%
87
11
3
Interest rates
%
78
5
17
%
80
14
6
Inflation
%
78
2
21
%
66
26
8
The national
unemployment rate
%
55
13
32
%
42
25
33
Home values in my area
%
52
17
30
%
67
23
10
The stock market
%
37
29
34
%
56
26
18
Q905: Thinking ahead to next year, do you think each of the following will increase, decrease, or stay about the
same?
Base: All shareholders (n=1,006)
77
Among investors, the top two holiday wishes for 2005 are a stable government for
Iraq and gasoline prices at $2.00 per gallon. Compared to last year, the percentage
of shareholders who would like a stable government in Iraq nearly doubled.
Gifts Would Most Like to Receive this Holiday Season
A stable government in Iraq
22%
12%
22%
Gasoline at $2.00/gallon (regular)
My portfolio's gainers outpace my
losers by more than 3 to 1.
15%
13%
A 20% reduction in my health
insurance premiums
11%
The Dow at 12,000
9%
10%
A 5% interest-bearing checking
account
Extension of President Bush's tax
break
A 2% reduction in the umemployment
rate
A chance to buy into a hot IPO
17%
7%
8%
6%
7%
4%
4%
3%
5%
NA
Oil at $20 a barrel
20%
NA
Elimination of estate taxes
5%
Men
Women
Q1210: As an investor, which one of the following gifts would you most like to receive this holiday season?
Base: All respondents October 2005 (n=1,006); All respondents November 2004 (n=1,110)
78
More women than men ranked a stable Iraqi government as the
number one gift they would like to receive this holiday season.
Gifts Would Most Like to Receive this Holiday Season – by Gender
Gender
Total
Men
Women
%
%
%
A stable government in Iraq
22
19
27
Gasoline at $2.00/gallon (regular)
22
21
24
My portfolio’s gainers outpace my
losers by more than 3 to 1
15
16
12
A 20% reduction in my health
insurance premiums
11
10
13
The Dow at 12,000
9
11
7
A 5% interest-bearing checking
account
7
7
7
Extension of President Bush’s tax
break
6
7
4
A 2% reduction in the unemployment
rate
4
5
4
A chance to buy into a hot IPO
3
3
2
Q1210: As an investor, which one of the following gifts would you most like to receive this holiday season?
Base: All respondents (n=1,110), Men (225), Women (126)
79
More than 6 in 10 shareholders would advise new investors to have a
more diversified portfolio and save more of their pay in a 401(k) plan.
Advice for New Investors
64%
Have a more diversified portfolio
60%
Save more of their pay in 401(k) plan
Have a better understanding of the investment alternatives within their
retirement plan
55%
Buy less stock in the company they work for
31%
Move more aggressively to reallocate or rebalance their retirement portfolio
in view of changing market conditions
27%
Buy more money market funds, CDs and cash equivalents
21%
17%
Rely more on a professional investment advisor
12%
Rely less on a professional advisor
Buy more bonds or bond funds
11%
Buy fewer technology or technology stock funds
10%
Buy fewer growth stocks or growth stock funds
8%
80
Q1215: If you could advise new investors on what to do for 2006, what would you tell them?
Base: All respondents (n=1,006)
Older shareholders would advise new investors to have a
diversified portfolio, save more in their 401(k) plan and better
understand the investment alternatives available to them.
Advice to Investors
Age
Total
35 or less
36-49
50-64
65+
%
%
%
%
%
Have a more diversified portfolio
64
49
67
70
66
Save more of their pay in 401(k) plan
60
43
62
63
70
Have a better understanding of the
investment alternatives within their
retirement plan
55
37
53
61
65
Buy less stock in the company they work
for
31
17
29
29
47
Move more aggressively to reallocate or
rebalance their retirement portfolio in view
of changing market conditions
27
10
30
25
39
Buy more money market funds, CDs and
cash equivalents
21
23
18
23
21
Rely more on a professional investment
advisor
17
18
9
17
25
Rely less on a professional investment
advisor
12
7
12
13
15
Buy more bonds or bond funds
11
10
9
11
13
Buy fewer technology stocks or stock funds
10
9
9
9
11
8
6
6
6
14
12
17
13
14
6
Buy fewer growth stocks or growth stock
funds
Something else
Q1215: If you could advise new investors on what to do for 2006, what would you tell them?
Base: All respondents (n=1,006); 35 or less (n=143); 36-49 (n=280); 50-64 (n=385); 65+ (n=198)
81
Demographics
82
Shareholder Demographics
Gender
Total
%
Male
Female
61
39
35 years old or less
36-49
50-64
65+
MEAN
Marital Status
Single, never married
Married
Divorced
Separated
Widowed
Living with partner
Total
%
21
62
7
1
3
5
Children in Household Under 18
0
1
2
3+
MEAN
Age
Total
%
75
12
9
4
0.4
Total
%
21
30
22
27
49.4
Race/Ethnicity
White
Black/African-American
Asian or Pacific Islander
Native American or Alaskan Native
Mixed racial background
Other race
Hispanic
Decline to answer
Total
%
77
7
4
1
1
*
8
2
83
Shareholder Demographics (Cont’d)
Education
High school graduate or less
Some college
College (e.g., B.A., B.S.)
Graduate school (e.g., M.S., M.D., Ph.D.)
Party Identification
Total
%
27
20
28
17
Republican
Democrat
Independent
Total
%
35
33
33
Employment
Employed full-time
Employed part-time
Self-employed
Not employed, but looking for work
Not employed and not looking for work
Retired
Student
Homemaker
Total
%
47
8
11
3
1
27
9
7
Political Philosophy
Conservative
Moderate
Liberal
Total
%
33
45
21
84
Shareholder Demographics (Cont’d)
Household’s Total Net Worth
Less than $50,000
$50,000 to $99,999
$100,000 - $249,999
$250,000 or more
Not sure/ Decline to answer
Mean
Investable Assets
Total
%
12
12
14
37
25
$585,400
Less than $50,000
$50,000 to $99,999
$100,000 - $249,999
$250,000 or more
Not sure/ Decline to answer
Mean
Household Income
Less than $50,000
$50,000 to $99,999
$100,000 to $149,999
$150,000 or more
Decline to answer
Mean
Member of Investment Club
Total
%
25
35
19
8
14
$89,251
Total
%
10
90
Total
%
4
7
89
Current Member
Former Member
Never a Member
Region
Heard of BetterInvesting
Yes
No
Total
%
28
14
11
22
25
$402,821
East
Midwest
South
West
Total
%
23
21
32
23
85
Detailed Methodology
86
Detailed Methodology
The Voice of the American Shareholder Quarterly Poll Wave 7 was conducted by Harris Interactive on behalf of
BetterInvesting. Interviewing was conducted between October 11 and October 24, 2005 among a nationally
representative sample of 1,006 U.S. adults aged 18 and older who currently have investments in individual stocks
or stock mutual funds. The length of the questionnaire was 10 minutes in length, not including the demographics.
SAMPLE SELECTION
Harris Interactive maintains the Harris Poll Online database (HPOL) comprised of several million respondents who
have agreed to participate in survey research. The HPOL database was used as the sample source for this study.
E-mail addresses for respondents in the database have been obtained from over 100 sources, including the HPOL
registration site, Yahoo!, HPOL banner advertisements, and MSN/Hotmail.
Qualified respondents for this study were U.S. adults age 18+ who identified themselves as currently having
investments in individual stocks or stock mutual funds in response to the question “Please indicate which types of
investments or investment accounts you personally have.”
ONLINE INTERVIEWING PROCEDURES
Interviews were conducted using a self-administered, online questionnaire, via proprietary, web-assisted
interviewing software. The HPOL interviewing system permitted online data entry of interviews by the respondents.
Questionnaires were programmed into the system with the following checks:
1.
2.
3.
4.
5.
6.
7.
Question and response series
Skip pattern
Question rotation
Range checks
Mathematical checks
Consistency checks
Special edit procedures
87
Detailed Methodology (cont’d)
ONLINE INTERVIEWING PROCEDURES (cont’d)
To maintain the reliability and integrity in the sample, each invitation contained a password that is uniquely assigned to
that e-mail address. A respondent was required to enter the password at the beginning of the survey to gain access
into the survey. Password protection ensured that a respondent completed the survey only one time.
To increase the number of respondents in the survey and to improve overall response rates, up to two additional
reminder invitations are typically mailed at 2-4 day intervals to those respondents who have not yet participated in the
survey. For this study, one reminder was sent to potential respondents.
To increase the number of respondents in the survey and to improve overall response rates, respondents were
provided with a summary of some of the survey responses. This too was done via the Internet. Respondents were
sent an email that provided them access to a web site that contained the survey findings. As with the survey itself, this
was a password protected site that was accessible for a limited period (1-2 weeks).
All data were then tabulated, checked for internal consistency and processed by computer. A series of computergenerated tables were produced for each of the key sample groups that showed the results of each survey question,
both by the total number of respondents and by the key subgroups.
88
Detailed Methodology (cont’d)
WEIGHTING
Completed interviews were weighted to figures obtained from the March 2005 Current Population Survey (CPS).
Harris used several demographic variables (e.g., sex, age, education, race and ethnicity and income) to generalize
survey results to the population at large.
In addition, Harris Interactive applied a proprietary technique to the data called "propensity weighting" that
essentially balanced all the characteristics (e.g., demographic, attitudinal, and behavioral) of online respondents. It
is no surprise that certain kinds of people have a greater or lesser likelihood to be online and therefore to reply to
our surveys. To account for this, Harris gave each individual a “propensity weight” which corresponded to their
likelihood to be online. This ensured that the sample represented the general shareholder population at large and
was not skewed toward more active online users or survey takers. In addition, people who had a lesser likelihood
to be online acted as a proxy for those who are not online at all. Typical propensity weights that were used
included measures of activity (our online respondents do more things), knowledge (our online samples are better
informed), and attitudes (our online samples are more skeptical or cynical).
89
Detailed Methodology (cont’d)
WEIGHTING (CONT’D)
It is also worth mentioning that Harris conducts parallel telephone and online research on a regular basis through
The Harris Poll, our monthly omnibus survey. By conducting this research, Harris is able to track results to make
comparisons between data collected online and by phone, closely examine the biases and most importantly,
develop strategies for correcting these biases. In fact, Harris has an internal department that is entirely focused on
conducting this “research on research.”
EDITING AND CLEANING THE DATA
The data-processing staff performed machine edits and additional cleaning for the entire data set. Our edit
programs acted as a verification of the skip instructions and other data checks that were written into the online
program. The edit programs listed any errors by case number, question number and type. These were then
resolved by senior personnel, who inspected the original file and made appropriate corrections. Complete records
were kept of all such procedures.
90
Detailed Methodology (cont’d)
CALCULATION FOR BETTERNVESTING INDEX
The BetterInvesting Index measured shareholders’ overall perspective in the stock market from three different
vantage points or categories: 1) overall confidence in the stock market and economy, 2) personal investment
behaviors and 3) attitudes about risk and the value of stocks.
Within each of these vantage points, the Index was derived from component items from the BetterInvesting Voice
of the American Shareholder January 2004, May 2004, November 2004, February 2005, May 2005, and October
2005 surveys. The component items are as follows:
1) Overall confidence in the stock market and economy:
Q410: How much confidence do you have the U.S. economy is generally moving in the right direction?
2) Personal investment behavior
Q611 a, b: Thinking about your investment portfolio, over the next six months, do you plan to increase, decrease,
or make no change in your investments in (individual stocks; stock mutual funds)?
Q605: Investment risk is typically defined as a greater likelihood that your portfolio may lose value but it often
associated with higher returns. How would you characterize most of your investments on a scale from “not risky at
all” to “very risky”
3) Attitudes towards investment risk and the value of stocks:
Q602: How strongly would you agree or disagree with the following statements:
 It’s a good time to move money into safer, lower risk investments from higher return/higher risk
investments.
 Most stocks are a better bargain now than they were a year ago.
 It’s a good time for new investors to get involved in the stock market.
91
Detailed Methodology (cont’d)
CALCULATION FOR BETTERINVESTING INDEX – (cont’d)
For each component item within the three overall categories, a ‘component score’ was calculated by taking the
difference of the percentage of positive responses and the percentage of negative responses.
For example, in October 2005, Q410: “How much confidence do you have that the United States’ economy is
generally moving in the right direction?”

9% responded that they have a great deal of confidence in the direction of the economy, 78%
responded that they had a fair amount or not much confidence and 13% indicated they had no
confidence at all.
This yielded a component score of 9% - 13% = -4.0%
To calculate the BetterInvesting Shareholder Index, we then took the mean of the 7 component scores.
92
Detailed Methodology (cont’d)
CALCULATION FOR BETTERINVESTING INDEX – (cont’d)
The following table shows the component scores for each item used in calculating the Index for September 2003,
January 2004, May 2004, November 2004, February 2005, and May 2005.
Please note that since the three statements that make up Q502 were not asked in the September 2003 survey, the
scores below should only be used to get a general sense of how the scores have changed on the other items that
were repeated between September 2003 and November 2004.
Component Scores
Sept ’03
Jan ’04
May ’04
Nov ’04
Feb ’05
May ‘05
Oct ‘05
Confidence that US economy is moving in right
direction
5.9
15.2
10.6
6.5
-2.5
0.5
-4.2
Increase, decrease, or make no change in individual stock
investments, next 6 months
24.0
27.3
18.6
20.8
19.5
17.5
16.5
Increase, decrease, or make no change in stock mutual funds, next
6 months
21.8
25.8
19.3
17.5
23.5
15.3
13.3
How would you characterize most of your investments (1=not risky,
7=very risky)
--
7.0
-1.1
0.0
0.2
1.4
0.4
Good time to move money into safer, lower risk investments
--
3.3
-6.7
-15.5
-16.0
-23.2
-27.8
Most stocks are a better bargain now than they were a year ago
--
9.8
7.7
9.2
-0.2
7.4
1.2
Good time for new investors to get involved in the
market
--
47.0
27.6
26.3
30.1
16.1
8.8
Index Score
--
19.3
10.9
9.3
7.8
5.0
1.2
Component Item
93
Detailed Methodology (cont’d)
CALCULATION FOR BETTERINVESTING INDEX – (cont’d)
Validating the Index
In order to measure the validity of the BetterInvesting Index, an investment allocation exercise question was
included in the January 2004, May 2004, February 2005, May 2005, and October 2005 surveys. The purpose of
this question was to be able to link the “attitudinal” nature of the NAIC Index to observable behavior in future waves
of this research.
The question (Q615) asked: “If you had ($10,000/$100,000) to invest, how much would you invest in each of the
following?
 Individual stocks
 Stock mutual funds
 Individual bonds
 Bond mutual funds
 Cash
 Alternative Investments
This question was structured so that half of all shareholders interviewed were shown $10,000 in the question and
the other half were shown $100,000.
The idea was that changes in shareholder confidence, as measured by the Index, should be reflected in changes in
portfolio allocation. As confidence improves, we would expect that shareholders would become growth-oriented
and conversely as confidence weakens, we would expect that shareholders would allocate money towards safer
investments.
94
Appendix
95
Component Scores by Gender
Component Scores
Question
Male
Female
Q410
0.4
-11.4
Q511a1
18.3
13.9
Q511a2
16.5
8.5
Q505
12.7
-18.7
Q502a1
-21.4
-37.8
Q502a2
-2.3
6.8
Q502a3
12.6
3.0
36.7
-35.7
5.2
-5.1
S=
BetterInvesting
Index =
96
Component Scores by Age
Component Scores
35 or less
36-49
50-64
65+
Less than
55
55+
Q410
-3.5
-3.8
-7.8
-2.3
-4.1
-4.4
Q511a1
12.6
24.4
14.2
13.0
19.0
13.1
Q511a2
19.6
16.8
13.8
4.1
18.1
6.5
Q505
11.6
20.6
4.0
-33.9
16.5
-22.4
Q502a1
-10.3
-26.1
-28.9
-42.8
-19.6
-39.5
Q502a2
14.0
-1.4
-0.6
-4.4
4.5
-3.4
Q502a3
14.0
10.1
7.8
4.2
10.6
6.4
S=
57.8
40.6
2.5
-62.0
45.0
-43.6
8.3
5.8
0.4
-8.9
6.4
-6.2
Question
BetterInvesting
Index =
97
Component Scores by Region
Component Scores
Question
East
Midwest
South
West
Q410
-3.0
-6.0
-1.6
-7.6
Q511a1
22.0
15.4
15.2
14.1
Q511a2
9.6
9.8
14.2
19.1
Q505
9.0
-12.1
-0.7
4.7
Q502a1
-33.4
-32.5
-20.6
-28.1
Q502a2
-5.3
2.8
4.9
1.2
Q502a3
19.2
15.5
3.1
0.3
S=
18.2
-7.2
14.6
3.7
2.6
-1.0
2.1
0.5
BetterInvesting
Index =
98