Real estate is the top place to put your money, according to a quarterly survey of about 1,100 investors conducted for the National Association of Investors Corp.

About 22 percent of respondents selected real estate as the best industry to invest in now, 39 percent selected real estate as one of the top three best investment opportunities, and 54 percent said the industry’s past performance is an indication of future promise.

Pharmaceuticals and technology also ranked high in this latest Voice of the American Shareholder poll.

The pharmaceutical industry ranked second with 16 percent of shareholders choosing it as a good investment in the current environment, and 42 percent of respondents selected pharmaceuticals as one of their top three investment choices, while 14 percent of respondents said technology was a good choice.

“Growth potential” was cited by 64 percent of the respondents as the reason for selecting an industry as a good investment. Also, 43 percent of shareholders said they evaluate an industry’s past performance to anticipate future promise.

American shareholders, cautious following the recent financial troubles plaguing the airline industry, pegged travel as the worst industry for investment. Thirty-eight percent put the travel industry among the top three worst investments. Government was selected by 27 percent and health care by 23 percent as among the top three worst investments. Investors cited out-of- control costs as the primary reason why travel, government and health care are viewed so dimly.

Forty-five percent of investors feel government is not prepared to deal with the current terrorism threat, further eroding confidence in that sector.

NAIC, a non-profit organization focused on investor education, introduced the poll in 2003. The poll is designed to track investing behavior and provide insight into shareholders’ attitudes and views on current topics that could affect their investment decisions. Participants were owners of individual stocks or stock mutual funds, 18 or older.

This poll was conducted online by Harris Interactive from Nov. 3-10, immediately following the 2004 presidential election.

“With this survey, we are able to gain insight into what’s on investors’ minds and how they plan to approach the coming year,” said Ken Janke, NAIC chairman. “The Voice of the American Shareholder Poll truly takes the pulse of individual investors and helps us understand their perspectives.”

A summary of the best and worst investments selected by survey participants is available at http://www.better-investingnewsroom.org/voice/voas1204-charts01.html.

The overall view shareholders have about the economy and stock market could be best characterized as cautious:

  • The decline in confidence in the direction of the economy has continued for the third straight quarter and is at its lowest level since September 2003, when this was first measured by the VOAS poll.

  • The proportion of shareholders who think it is a good time to move into safer investments continues to increase and fewer think stocks are a better bargain than they were one year ago.

  • There has been a drop in the NAIC Shareholder Confidence Index (SCI) to 9.3 from 10.9 in May 2004.

  • Many anticipate that interest rates, inflation and the national unemployment rate will increase in 2005.

After rising between September 2003 and January 2004, confidence in the direction of the economy has declined to its lowest levels in this series of research, and the percentage of shareholders who have no confidence at all has doubled.

The SCI is based on a scale from -100 to +100 where zero equals a neutral attitude towards the stock market. An Index of 9.3, down from 10.9, shows traces of optimism tempered by concern about the economy’s direction, rising energy prices and anticipation of rising interest rates.

Half of respondents to the VOAS poll agreed that now is a good time for new investors to get involved in the stock market, which is almost unchanged from the May 2004 findings (51 percent). But an increasing number of investors (40 percent) consider it a good time to move into less risky investments. This percentage has steadily increased from 34 percent in January 2004 to 37 percent May 2004 and is now at 40 percent.

Coloring their outlook for 2005, 87 percent of American shareholders said they believe that the health care costs they pay will increase while 80 percent believe interest rates will rise. Sixty-seven percent of respondents expect home values in their area to increase while 66 percent expect a rise in inflation. About 56 percent said they anticipate a rise in the stock market in coming year.

NAIC currently serves 243,934 members, including 21,312 investment clubs. On average, each NAIC member invests $84 per month in an investment club portfolio. The average NAIC club invests in excess of $927 each month. The combined investment portfolios of NAIC members exceed $117 billion.

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Send tips or a Letter to the Editor to glenn@inman.com or call (510) 658-9252, ext. 137.

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