Poll: Optimism About Market's Future

American investors have experienced a year battered by market dips, recession, terrorism and corporate scandals. And even though many say they're not yet ready to start buying stocks now, and regard the stock market as a riskier investment than real estate or gold, they maintain their optimism about the market's long term course.

A majority of investors describes the stock market now as being in generally bad condition, more than said this before last year's terrorist attacks. But their perception has improved since July, near the height of news about corporate scandals. Then, three-quarters thought the market was in bad shape.

Investment jitters seem more related to those corporate scandals and to the general state of the market than they are to last year's September 11 attacks. Half are investing less because of corporate scandals like those at Enron, WorldCom and Arthur Andersen, while 24% are investing less because of the threat of terrorism. Almost three-quarters say the scandals have had a great impact on the market; half say that about the terrorist attacks.

48% are personally worried about investment loss due to the corporate scandals. But there is growing optimism among all investors that the market trauma from the corporate scandals may have run its course: in July, 62% were worried about losses stemming from the scandals.

THE PERSONAL IMPACT

Investors' retirement portfolios have taken a significant hit - two-thirds say that their retirement accounts have lost money in the last two years. One in five of all investors say they lost a third or more of their retirement portfolios in the last two years. Only 6% say they have made money.

Taking an active role in managing investments seems to have helped stem the losses, though majorities of both active and passive investors lost money in the last two years. Fewer of those who say they generally decide on their own which stocks to buy said they'd lost money in the last two years than those who said they relied on their brokers to make their stock decisions.

WHERE WILL THE MARKET GO AND WHAT SHOULD YOU DO?

Most investors think they shouldn't be heavily into stocks right now - 79% think half or less of their own portfolios should be in stocks right now. Many investors think the worst may be yet to come. Only one in four believes the market has bottomed out, making this a good time to buy. The rest are waiting or say they have lost faith in the market and don't intend to buy any more.

Those with the lowest incomes and investors over the age of 65 -- who are probably least able to absorb stock market losses -- are the most likely to have lost faith in the market.

45% say that they have altered their approach to investments as a result of the changes in the stock market, and can describe very explicitly what changes they have made. These changes include buying more conservative stocks, selling stock and increasing the liquidity of their investments by putting money into CDs, money market accounts or converting it to cash.

Despite their losses, a majority of investors believes in principle in a buy and hold approach to managing their stock investments. 85% say their market strategy is to hold stocks and ride out the market's ups and downs, while 12% believe in buying and selling often to react to market swings.

Few investors think the market will get back to its March 2000 high anytime in the immediate future. For most, the improvement will take more than a year, with many suggesting the recovery will take three years or more. But hardly any of the investors interviewed in this poll volunteered that the market will NEVER go back to its record high.

For the next year, the investor prediction is for more of the same, with the market rising, but only by a little. About one in ten expect a large rise, and only a few more expect the market to drop.

And for the more immediate future, there are no big changes predicted. At the end of the year, half think the Dow Jones average will be somewhere between 7,000 and 9,000. A hopeful third think it will rise above 9,000, while a small group of true optimists think it will rise back above 10,000 by December 31.

Despite it all, most American investors still have some confidence in the stock market, though that has been challenged by the corporate scandals in the last year. Less than one in ten say they have completely lost faith.

FAITH IN THE STOCK MARKET
	Not been shaken	Declined, but still there	Could return, if government makes changes	Completely lost faith
	14%	49%	27%	9%

However, conservatives were more likely than moderates or liberals to say their faith in corporate America was not shaken at all: 21% of them said this, while just 10% of moderates and 9% of liberals said so.

THE ECONOMY

Investors are not upbeat about the current economy, but they do have an optimistic outlook about the long term. Many believe the country is currently in recession, and don't foresee a recovery on the horizon. One positive note: investors are bullish about real estate prices, which they expect to rise.

Like Americans overall, investors divide evenly about the state of the economy now; 48% say it is good, and 50% say it is bad. A recent CBS News/New York Times Poll found 50% of Americans thought the economy is in good shape, and 50% thought it is in bad shape.

Investors' views of the economy have changed little since the terrorist attacks last September. However, prior to the attacks, views were much more positive; in June 2001, 72% thought the economy was in good shape.

Negativity about the economy is widespread. 76% of investors believe the economy is either currently in a recession, or near one.

20% of all investors feel the country has been in a recession in the past year, but is not now in one. And 12% think the economy is not currently in a recession, has not been in one in the past year, and is not near to one now.

The outlook for the future is guardedly positive, and most investors see no sign of recovery in the near term. 18% of investors think the country is now in recession and that a recovery has begun, but over twice as many -- 39% -- think the recession is not yet over.

Most don't expect a change in the direction of the economy to occur anytime soon; 53% view the economy as stagnant now. 20% think it is improving, but slightly more, 27%, think it is getting worse.

But opinions about the longer term economy are much more positive. 51% think that a year from now the economy will be better than it is today. Another 32% think it will be the same, and only one in ten expect a continued downward slide.

EXPECTATIONS FOR THE ECONOMY ONE YEAR FROM NOW:
	Better	Same	Worse
	51%	32%	11%

One other possible investment, gold, is viewed as much riskier. 45% think gold is a safe investment, but just as many see it as risky. And, fewer are certain about where the price of gold will go in the next year. 49% expect it to go up, but 21% think it will go down, and 26% are uncertain.

the stock market is seen as far riskier than either of these other options. 66% think the market is a risky investment, and 30% believe it is safe.

Overall, real estate is a good bet, according to investors. It is viewed as less risky than either the gold market or stocks by a wide margin.

Many investors don't think the state of the economy is reflected in stock prices. 51% think national economic conditions are not accurately reflected in the stock market, while 42% think they are.

BUSH, INVESTORS AND THE ECONOMY

President George W. Bush gets slightly higher marks from investors than he did earlier this summer, and investors are more likely than Americans at large to approve of his handling of the economy. However, many investors believe that the economy is in rough shape - and they point to Bush's policies as one of the key reasons.

69% of investors now approve of the job Bush is doing as President, a figure virtually unchanged since mid-summer, and 50% approve of the job he is doing on the economy, up from 46% in July.

Bush's ratings among investors are somewhat better than among the general public: the latest CBS News/New York Times poll showed 63% of all Americans approve of Bush's performance and 47% approve of his handling of the economy.

There is no consensus among investors on the state of the country or the economy. Investors are about evenly split on whether the economy is in good or bad shape: 48% say good or fairly good, 50% say bad or fairly bad. Slightly more say the country is headed in the wrong direction overall: 49% say it is on the wrong track, 42% on the right track. This, too, is unchanged since mid-summer.

But there are some warning signs for the President, particularly among those who see the economy as in bad shape or heading that way.

Bush's ratings very much depend on how investors see the economy. Of those who think the economy is in recession, just 38% approve of the President's handling of the economy. Of those who think it is not, 67% approve of his performance.

Most investors think Bush's policies are having an effect on the economy, for better or worse. One in four say his policies have a lot to do with the way the economy is today, and 54% say Bush's policies have a little bit to do with it.

But Bush is more likely to get blame from those who say the economy is bad than he is to get credit from those who say it is good. Of those who believe the economy is doing badly, 33% think the President's policies have a lot to do with it - but of those who think the economy is good shape, just 17% think Bush's policies had a lot to do with that.

And Bush has not had much success over last month in convincing investors that, despite the demands of the war in Afghanistan, he is paying more attention to the economy. Less than half (44%) say he is paying as much attention to the economy as he can. In August, 43% of investors said he was.

Nearly three-fourths of Democrat investors think Bush needs to pay more attention to the economy, while over two-thirds of Republicans think he is paying enough. 46% of independents say he needs to pay more attention.

For detailed information on how CBS News conducts public opinion surveys, click here.