Poll Analysis: Stock Market Gyrations Not Making an Impact

     Most Americans seem unruffled by recent fluctuations in both the Dow Jones and Nasdaq markets, with a vast majority rating the economy as strong and with very few reporting having their own personal finances affected by these recent swings.
     In fact, the stock market is not the leading indicator of economic strength or weakness for most Americans, most of whom view the unemployment rate as the biggest gauge of a strong economy or as the biggest omen of economic trouble.
     Not surprisingly, there are stark differences in these views by class, with the wealthiest Americans (those with annual household incomes of $100,000 or more) most likely to invest in the stock market and own equity in other investments, but also the most likely to feel that some sort of shake-up to the stock market is inevitable.
     Additionally, despite our booming economy and a stock market that is the strongest this country has experienced, there is an undertone of concern among Americans~a fear that while all might be well now, good economic times are by no means guaranteed for the future.
     The poll also illustrates our continuing gap between the ,haves0/00 and the ,have-nots,0/00 which manifests itself in vast discrepancies in economic outlook by both income and education levels.

Overall Economy     Americans who answered the Los Angeles Times, latest poll that was conducted nationally between May 4th and May 7th are confident in the nation,s economy, with over eight in ten (84%) saying that the nation,s economy is doing well (with a quarter saying very well).
     At the time of the poll, just 11% of respondents said they worry that they will lose their job in the next year.
     The technology industry is most credited with our economic well-being (26%) followed by President Clinton (14%). The 14% who say the economy is doing badly predominantly blame Democrats in Congress (20%).
     Americans in the poll view the unemployment rate (38%) and the rate of inflation (35%) as the most important measures of this country,s economic health. Correspondingly, Americans view a rise in the unemployment rate as the biggest threat to our economy, followed by a drop in the stock market.
     Given this faith in the economy, fewer than a quarter (23%) say that they think the Federal Reserve Board should increase interest rates and 64% say that the Fed should not raise the rates. This opinion varies dramatically by income and education:
     39% of those making over $100,000 believe that interest rates should be raised
     12% of those making less than $20,000 feel this way
     40% of those with college or more say the Fed should raise interest rates
     15% of those with high school or less say so

The Stock Market     Though fully 47% of respondents are invested in the stock market~either through individual or company-owned stock or through mutual funds~more than four in ten (41%) of this group say they do not follow the stock market closely; 62% of respondents overall do not follow the market closely.
     Additionally, while nearly half (49%) think that the stock market has natural fluctuations and therefore does not need to drop a little to adjust for its potential over-inflation, 55% believe that some sort of shake-up to the market is unavoidable and is yet to come. Just 22% of those polled say this shake-up has already occurred.
     Despite the inevitability of a shake-up, few of those currently invested in the market appear troubled by the recent ups and downs in the Dow Jones and Nasdaq indices. Two-thirds of those currently invested say that they do not plan to make any changes in their stock investments due to these fluctuations, and in fact, over a quarter (27%) say that they plan to increase their stocks as a result of the market gyrations.
     Similarly, six in ten reported that the recent swings in the stock market would have no effect on their own personal finances:
     21% said the market changes would have a good effect on their personal finances
     14% said the changes would have a bad effect
     Additionally, nearly two thirds (64%) of those invested report confidence in the stock market, with 25% of this group saying they feel more confident in the stock market than they did just three years ago:
     6% of those with stocks feel less confident in the market than they did three years ago
     65% say their confidence level is the same as it was three years ago
     In other words, despite recent din about the drops in the Dow Jones and the Nasdaq, most Americans are not worried about another Black Monday or market crash such as the one in 1987.
     In fact, when asked what it would take to make them get out of the market, 79% said nothing could make them leave the market. Additionally, 91% say that they are in the stock-market for the long term, as opposed to watching the market and jumping in and out based on the valuation of the highs and lows (3%).
     At the same time, just over one in five (21%) of those who are not currently invested in the market have plans to invest in the future. The number one reason this group cites for not investing is a lack of extra money.

Warning Signs     Even though most Americans do not currently report feeling concern over the recent ups and downs to the market, the poll indicates that there are some warning signs about the economy and people,s perceived wealth and confidence in the market.
     Over a quarter (27%) of those polled say that their personal finances are shaky. Nearly four in ten (37%) say that it is difficult for them to pay off their loans. These numbers are striking in a time of economic prosperity.
     However, there are stark variations in these numbers. Those who have a 401(k) plan~meaning those who are potentially more taken care of in the future~are less likely to report shaky personal finances (15%) than those with no 401(k) plans (35%).
     There are also drastic variations in these numbers by income level as well as stock ownership, with those owning stock more likely to feel financially secure.
     Additionally, while more than four in ten (43%) say they have confidence in the stock market, 46% report not having confidence in the market; even 31% of those currently invested say they do not have confidence in the market. Again, these numbers vary socio-economically, with those with higher household incomes and levels of education more likely to feel confidence in the stock market.

The Have and Have-Nots: More Differences     Unfortunately, confidence in the market is just one area where there are striking differences between the richest Americans and the poorest. Financial security, stock ownership and future well-being are all areas where these differences are salient and exemplary of how different life is for the rich than it is for the poor in this country, even during times of economic boom.
     More than half~54%~of those with household incomes under $20,000 say that their personal finances are shaky. In contrast, just 1% of those making more than $100,000 say their personal finances are shaky (and just 5% of those making more than $60,000 say so).
     Similarly, 57% of those making under $20,000 say their loans are difficult to pay, while just 16% of those making more than $100,000 report difficulty with loan payments.
     While 77% of those with household incomes of more than $100,000 own stock, just 16% of those with households incomes under $20,000 own stocks.
     Plans for the future are similarly stymied for the poorest Americans. Just 8% of those with household incomes of less than $20,000 are protected by 401(k) plans (61% of those making more than $100,00 have 401(k) plans).

Microsoft and Dot Com Companies     Despite the growing prevalence of the Internet, just 12% of those who currently invest go online to do so (and only 6% exclusively use the internet for trading). About a quarter (26%) of online investors say that they think that they will be using the Internet more often to make trades within the next year than they do right now.
     Just 18% of those not currently making investments online say it is likely they will do so within the next year.
     While most respondents have a favorable view toward Microsoft (60% versus 9% with unfavorable impressions), one in four had not heard of the company. Respondents were unsure of how they felt about the Microsoft ruling, in which a federal judge found Microsoft to be in violation of anti-trust laws, but a majority (53%) do not want to see Microsoft broken up.
     Interestingly, a plurality (43%) of all respondents believe that the Microsoft ruling played a role in the drop in the Nasdaq, with 56% of those invested in the market saying the Microsoft ruling was a factor in the Nasdaq drop, and 73% of those invested in dot com companies holding this view as well.

Dot Com Investors     The newest buzz to the strength of the stock market~and particularly the Nasdaq~has been the growth of technology and dot com companies. Highlighting this growth is that 11% of respondents (and 16% with college or more) have jobs that involved work in the dot com or technology industries. In comparison, just 3% say their job involves work in the financial industry.
     Though only a fraction of those surveyed (10%) currently invest in dot com companies, it is this group who voices the most confidence in our economy, in the way things are going in the nation and in their own personal finances. For example,
     95% of those who invest in dot com companies say their own personal finances are secure
     87% of those who are invested in general say so
     70% of those who are not invested in dot com companies say their own personal finances are secure
Additionally,
     79% of those who invest in dot coms say their loans are easy to pay off
     69% of those who invest in the stock market say so
     52% of those who do not invest in dot coms say their loans are easy to pay off
     In other words, the newest growth sector of our economy is the most likely to feel confidence in their own financial situations.
     Yet despite this confidence, of those who are not invested in the dot com or technology industry, only 10% feel they have missed the boat in terms of investing, and a majority~56%~have no interest in investing in this industry.

How the Poll Was Conducted     The Times Poll contacted 1,502 respondents nationwide, by telephone May 4 through May 7, 2000. Included in the sample are 874 respondents who own stock and/or stock mutual funds. Telephone numbers were chosen from a list of all exchanges in the nation. Random-digit dialing techniques were used so that listed and non-listed numbers could be contacted. The entire sample was weighted slightly to conform with census figures for sex, race, age, education and region.
     The margin of sampling error for the entire sample and for stock holders is plus or minus 3 percentage points. For certain subgroups the error margin may be somewhat higher. Poll results can also be affected by other factors such as question wording and the order in which questions are presented.