Wealthy Americans are divided on the outlook for the U.S. economy next year, but they’re more optimistic than pessimistic about prospects for the stock market, according to a survey released Monday.
The study of individuals with at least $500,000 in investable assets was conducted for PNC Wealth Management, a division of The PNC Financial Services Group Inc. in Pittsburgh. It found that 38 percent of respondents said they were optimistic about the U.S. economy in 2007, while 35 percent said they were pessimistic and 27 percent were unsure.
“That says to me that the jury is still out,” said Thomas Melcher, managing director and chief investment officer for ultrahigh net worth investors with PNC. “People are kind of uncertain, and everybody is waiting for more data.”
Still, the study found that high net worth individuals believed the market would perform well next year, with 50 percent saying they were more optimistic, 16 percent more pessimistic and 34 percent neither more optimistic or more pessimistic.
Melcher described this as reflecting “a healthy dose of pessimism” and added: “Since the market likes to climb a wall of worry ... there’s still some fuel out there to move the market higher.”
Ultrahigh net worth individuals — those with $10 million or more in assets — were a bit less comfortable with stock market prospects, with 23 percent saying they were more optimistic, 27 percent more pessimistic and 50 percent neither more optimistic or more pessimistic.
Melcher said he believed the extremely wealthy people were more affected by “geopolitical uncertainties” like the war in Iraq and tension with Iran and Korea. Concerns about global tension might have affected how the respondents answered the question about the biggest threat to their wealth.
The survey found that the greatest fear was of a terrorist attack, followed by a stock market decline, higher living costs in retirement years, declining U.S. competitiveness compared with other nations, and insolvency of the Medicare system.
Asked how their portfolios currently were invested, the wealthy Americans gave this breakdown: 43.7 percent in stocks, 15.6 percent in bonds, 54.4 percent in cash, 1.6 percent in hedge funds, 7.5 percent in private equity pools and 11.6 percent in real estate.
The survey of more than 1,100 adults was conducted in October and November for PNC Wealth Management by Harris Interactive. Results of the survey had a margin of error of plus or minus 3 percentage points.