When It Comes To Investment Performance, Perception Doesn't Always Match Reality

New Edward Jones Survey Finds That Despite Strong Stock Market Performance in 2012 the Majority of Americans Think Things Were Worse Than They Are

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Edward Jones

Dec 11, 2012, 11:11 ET

ST. LOUIS, Dec. 11, 2012 /PRNewswire/ -- As of December 6, the S&P 500 Index was up almost 12 percent since the beginning of the year and up a total of 45 percent since January 1, 2009. Without a doubt, these are strong numbers, yet according to a survey released today by financial-services firm Edward Jones, just 40 percent of Americans say the market performed well in 2012. In fact, 30 percent of Americans believe the stock market performance was poor this year, while another 14 percent believe performance was flat.

The survey of 1,010 respondents, conducted by Opinion Research Corporation, asked Americans to describe both how they felt the stock market performed in 2012 as well as their expectations for 2013 performance.

"The markets have performed very well in 2012, but most people were inundated by negative headlines during the presidential election campaign, and that appears to have given almost half of them a negative impression of the markets as well. However, those who opened their statements have been generally surprised and pleased by how well their portfolios performed this year," said Kate Warne, Investment Strategist at Edward Jones. "With the election now concluded and the fiscal cliff looming, it's important to stay the course and stick to the investment fundamentals. A long-term approach to investing is key, especially with all the short-term uncertainty."

The survey, conducted one day after the 2012 Presidential Election, provides a unique perspective into how the political landscape may impact performance expectations. More than one-third of Americans believe the stock market will perform better next year, and almost 10 percent of Americans say they expect "much better" performance in the coming year.

"Many investors are clearly ready for a fresh start, and it appears some optimism has returned post-election," Warne said. "However, with the uncertainty surrounding the fiscal cliff, investors need to brace for continued volatility in the short term as stocks rise and fall in response to every press conference in Washington. Ultimately, investors will do best by continuing to focus on what they can control, rather than reacting to what politicians say."

Additional highlights from the survey include:

Generational Divide

Respondents 35 to 44 were the most likely to respond that the markets performed well in 2012, with 47 percent saying so. Those 45 to 54 were the most likely to report negative performance, with 37 percent saying the markets performed poorly (compared to 30 percent on average). Respondents 65 or older were the most likely to say the market performed very poorly (17 percent compared to an overall average of 12 percent).
The youngest respondents, ages 18 to 34, expressed the most optimism for 2013 market performance, with 42 percent expecting it to perform better than 2012. Those 55 to 64 are the most bearish on the 2013 market performance, with 36 percent expecting poorer market performance next year.

Higher Income, Higher Market Performance:

The most affluent respondents responded most favorably about market performance in 2012, with 55 percent of respondents who have household incomes between $75,000 to $100,000 and 51 percent who have household incomes greater than $100,000 saying the market performed well. This compares to just 34 percent of those with household incomes at or under $35,000.
Those with household incomes at or under $35,000 and between $75,000 and $100,000 were in agreement that the 2013 markets would perform better than this year (38 percent each). The least affluent group was also the most likely to expect the market to perform much better than 2012 (15 percent).
With a more favorable view of 2012 and undoubtedly more concerns about rising taxes, 18 percent of respondents with household incomes at or above $100,000 believe the market will be much worse than 2012.

Larger Households "Size Up" Market Gains:

Forty-eight percent of respondents with children between the ages of 13 and 17 say the stock market performed well in 2012, while those with no children expressed the highest levels of market dissatisfaction, with almost one-third (31 percent) saying the markets performed poorly in 2012.
Respondents with children in their household were the most optimistic about 2013, anticipating market performance to be better than 2012 (41 percent), compared to 31 percent of respondents with no children.

About Edward Jones

Edward Jones provides financial services for individual investors in the United States and, through its affiliate, in Canada. Every aspect of the firm's business, from the types of investment options offered to the location of branch offices, is designed to cater to individual investors in the communities in which they live and work. The firm's 12,000-plus financial advisors work directly with nearly 7 million clients to understand their personal goals - from college savings to retirement - and create long-term investment solutions that emphasize a well-balanced portfolio and a buy-and-hold strategy. Edward Jones embraces the importance of building long-term, face-to-face relationships with clients, helping them to understand and make sense of the investment solutions available today.

Edward Jones, which ranked No. 5 on FORTUNE magazine's "100 Best Companies to Work For 2012," is headquartered in St. Louis. The Edward Jones Web site is located at www.edwardjones.com, and its recruiting Web site is www.careers.edwardjones.com. Member SIPC.

* Survey was based on 1,010 telephone and cell phone interviews of U.S. adults conducted between the dates of November 8-11, 2012. The margin of error was +/-3%.

SOURCE Edward Jones