Financial scars linger: 1/3 of investors wary of stocks

NEW YORK — The psychological scars of the financial crisis have yet to wear off, according to a survey by Wells Fargo Private Bank that found that one-third of investors are still wary of putting money in the stock market five years after the depths of the bear market.

One-third of the 500 affluent investors that responded to the just-released survey conducted in early February said the 2008-09 financial crisis "is still a factor in how much stock they are willing to own," the survey found.

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Other findings that show that investors' risk-aversion is still high five years after the worst stock market plunge since the Great Depression and despite market gains of nearly 180% for the Standard & Poor's 500 stock index:

·       More stock-free portfolios. Of those that remain wary of stocks, and who suffer from a "hangover" effect, 21% don't plan to invest in stocks at all.

"Despite the stock market reaching record highs this year, 21% of the respondents who remain wary of the market said nothing would get them to add more stocks to their portfolio," said Dean Junkans, chief investment officer for Wells Fargo Private Bank.

·      More conservative holdings. 87% of the wealthy investors, despite longer life spans today, said they are "either more conservative or have not made any changes" to their asset mix.

·      More focus on risk. Nearly half of the respondents, or 47%, said the most important factor in making investment decisions is "risk tolerance." Translation: many investors are still afraid of losing money in the stock market.

The takeaway: "Investors' confidence needs to be rooted in a conviction that they're taking appropriate risks to meet their long-term goals," says Junkans. "Without that conviction, emotional investing and reacting to daily news are a road to failure."

TNS, a consulting firm, conducted the firm for Wells Fargo Private Bank.

Reader's opinions : 

Mega Brilianingrum

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Despite the fact that the psychological scars of the financial crisis have yet to wear off, the stock market need to reassure the investors who don’t plan to invest in stocks at all to keep investing. Because the most important factor in making investment decisions is “risk tolerance”. The risk is haunting everyone in investment industry. Even the wealthy investors might get the risk as well. But keep holing on their commitment which is saying “either more conservative or have not made any changes” to asset their mix.

And apparently there are many investors who are still afraid of losing their money, it looks like they are not ready yet to run into the investment & stocks market. Because actually investors’ confidence is needed and it contains appropriate risks to meet their long-term goals. Without that conviction, investing and reacting to daily news are a road to failure. 

Source of article :

http://www.usatoday.com/story/money/markets/2014/03/26/survey-investors-still-wary-of-stocks/6903347/