06/15/98 BW/HARRIS POLL: STILL RIDING THAT MARKET WAVE

BW/HARRIS POLL: STILL RIDING THAT MARKET WAVE

Investors don't see many attractive alternatives to stocks right now. While fewer folks now expect stocks to go up over the next year than did six months ago, fewer anticipate a big crash or even think one is somewhat likely. Indeed, 37% of those polled think the stock market is either somewhat undervalued or fairly valued today, up from 33% asked in December, 1997. Investors are fairly blase about interest rates as well. Almost half of those polled expect rates to stay about the same, although 36% say interest rates may rise moderately. On the merger front, 62% of investors expect corporate dealmaking and consolidation to give a boost to stock market returns over the next year, while 16% think M&A could have a negative impact on their portfolios. Note: This is an extended, online-only version of the BW/Harris Poll that appears in the June 15, 1998, issue of Business Week. BEST BETS If you had to choose the one investment that you think would be the best to make right now, which would it be? MAY 1998 DEC. 1997 MAY 1996 Real estate 30% 33% 25% Mutual funds 24% 21% 24% Common stock 15% 11% 10% Bank or savings & loan deposits 9% 10% 8% Money-market funds 8% 5% 6% Government bonds 5% 5% 9% Gold or other precious metals 4% 4% 7% Corporate bonds 3% 4% 2% I don't save or invest at all 1% 2% 3% Don't know 1% 5% 6% ASSET ALLOCATION What percentage of your household's total assets does each of the following account for? (Results total less than 100%) May Dec. 1998 1997 Real estate 41% 40% Savings instruments and cash 23% 29% Stocks 11% 10% Bonds 4% 4% Other 11% 9% IN THE MARKET? Have you bought common stocks or shares in a stock mutual fund within the past year, or not? May Dec. May 1998 1997 1996 1989 Have bought 26% 24% 21% 15% Have not bought 73% 75% 78% 84% Don't know 1% 1% 1% 1% INVESTMENT PLANS Over the next six months, do you think you will probably invest a lot more in stocks or stock mutual funds, invest somewhat more, reduce your investment somewhat, or reduce your investment a lot? MAY 1998 DEC. 1997 MAY 1996 Invest a lot more 7% 5% 5% Invest somewhat more 22% 22% 22% Reduce somewhat 8% 10% 12% Reduce a lot 10% 13% 18% Stay the same 25% 22% 21% I don't save or invest 23% 21% 20% Don't know 5% 7% 2% TAKING STOCK Over the next year, do you think stocks will... MAY 1998 DEC. 1997 MAY 1996 Go up 35% 38% 39% Stay about the same 40% 39% 36% Go down 17% 16% 19% Don't know 8% 7% 6% INTEREST RATES Over the next year, do you think interest rates will... 1998 1998 Rise a lot 7% Drop moderately 6% Rise moderately 36% Drop a lot 1% Stay about the same 46% Don't know 4% CRASH TEST Over the next 12 months, how would you rate the chance of another big crash in the stock market? MAY 1998 DEC. 1997 MAY 1996 Very likely 12% 14% 12% Somewhat likely 32% 43% 35% Not very likely 38% 30% 35% Not likely at all 14% 9% 15% Don't know 4% 4% 3% (REMAINING QUESTIONS ASKED ONLY OF STOCK INVESTORS) GOING LONG In the long run, what sort of total returns (capital gains plus dividends) do you expect the stock market to produce for you? MAY 1998 DEC. 1997 MAY 1996 Below 5% a year 1% 4% 8% 5% to below 10% a year 27% 27% 36% 10% to below 12% a year 34% 29% 29% 12% to below 15% a year 22% 21% 13% 15% or higher a year 14% 14% 9% Don't know 2% 5% 5% MEASURING THE MARKET Overall, how would you describe the stock market's valuation? MAY 1998 DEC. 1997 Very overvalued 11% 10% Somewhat overvalued 49% 52% Fairly valued 29% 27% Somewhat undervalued 8% 6% Very undervalued 1% 2% Don't know 2% 3% BEAR SIGNS Over the next 12 months, what is the likelihood that the stock market will enter into a prolonged downturn lasting a year or longer? May Dec. 1998 1997 Very likely 5% 3% Somewhat likely 21% 21% Not very likely 56% 60% Not likely at all 18% 15% Don't know 0% 1% TECH-STOCK OUTLOOK Over the next 12 months, how do you expect technology stocks will perform, compared to the broader stock market? May Dec. 1998 1997 Significantly outperform 15% 11% Somewhat outperform 34% 40% Perform about the same 38% 30% Somewhat underperform 8% 12% Significantly underperform 1% 2% Don't know 4% 5% MERGER MANIA 1998 What impact do you Strong positive impact 9% think corporate dealmak- Somewhat positive impact 53% ing and consolidation No impact 17% will have on overall Somewhat negative impact 15% stock market returns Strong negative impact 1% in the next 12 months? Don't know 5% BIOTECH OUTLOOK Over the next 12 months, how do you expect biotechnology stocks in particular will outperform, compared to the broader stock market? 1998 Significantly outperform 14% Somewhat outperform 36% Perform about the same 36% Somewhat underperform 5% Significantly underperform 2% Don't know 7% ASIAN IMPACT 1998 What impact, if any, do you Strong positive impact 2% expect the instability in Somewhat positive impact 13% Asia to have on your invest- No impact 36% ments over the next 12 Somewhat negative impact 41% months? Strong negative impact 6% Don't know 2% Survey of 1,007 adults conducted May 21-28, 1998, for Business Week by Louis Harris & Associates Inc.
Edited by Keith H. Hammonds