Investment Optimism And Pessism: Results Of A New Fidelity Study
A native Bulgarian always complains that "Americans are too optimistic!" I try to explain that some of that is part of the DNA here, while he likes to attribute the rosy outlook to a lack of struggle. To prove the point, he cites an old joke from his former country, which I like to call "The Bulgarian Optimist".
The Bulgarian Pessimist meets the Bulgarian Optimist on the street. The Pessimist says, "Things CAN'T get worse!", to which the Optimist says, "No, things CAN get worse!"
I thought about the Bulgarian Optimist when I read a recent Fidelity Investments. The study examined how an investor's outlook related to his or her retirement readiness. Were investors with a pessimistic outlook more conservative and better long-term planners? Or were investors with an optimistic outlook more aggressive and a bit more reckless when it comes to defining retirement goals?
The most surprising result of the study is that only 15% of pessimists have completed a detailed income plan to help guide their finances in retirement, compared to nearly twice as many optimists (27%). HUH? Does that mean that pessimists just don't want to know the bad news? I would have thought that the pessimist relished the bitter truth.
On a more predictable level, it still amazes me how few Americans, whether pessimistic, optimistic or somewhere in between, are unwilling to hop on line and figure out what they need to do to reach their goals. The optimist in me wants to believe that Americans can right their financial futures by putting in some work. The pessimist in me worries that they won't.
(CBS)
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I, for one, was a lot close to retirement two years ago than I am now. LOL
Dr. Roubini, Marc Faber, and many others were yelling back in early 2006 we were headed for a tsunami and nobody was listening. We essentially have the same people in office today that were in denial back then. Ben and Tim are knowledgable and are good fits for what we need right now. But when you see conditions in Europe, Sans Germany and possibly Japan, not looking real great for the near term than we have reason to worry.
Our deficit is piling up, our dollar is weak, we have no clear cut industry that will lead us out of this 'recession', our exports are still weak, people are losing jobs and homes by the basket full, we have price deflations in our personal assets, banks are not lending, and the consumer is dizzy from the fourth 'technical' recession since 1990. That is only listing a few things Americans worry about. Let's not forget all the posturing on the hill over health care and the consumer has good reason to question the future.
For them to look past the next three years is difficult especially when you have some on Wall Street and other leaders who state it will be a 7-10 yr. no to slow growth period. It is funny you mentioned Fidelity investments, because infidelity from the people we trusted are the same ones asking us now to believe in them now.
Most Americans are probably paying down their debt and reducing their contributions to make it happen. Ms. Whitney today stated there will be another deluge of bank closings and so the people who make up 70% of our GDP are probably not going to be running to the nearest stores or dealerships anytime soon.
I just wonder how many Americans were deferred from early retirement because of this fiasco? I also wonder if they (the baby boomers) are going to be a little more cautious in trusting advisers again? You are right, people have to do homework but when the signals for good recovery are mixed, than what can you study? We cannot play shorts, calls or straddles on our mutual funds and that is what is needed because the consenus on the trading floors ranges from dire to good, all in one afternoon and dependent who is on the floor complaining the loudest.
Until Americans can get a handle on the immediate and near term (3-5 year) future of our economy and we see clearcut positive strides, than most people are probably going to wait on the sidelines. Anyway, thanks for the good articles you write and have a great weekend.