By Barnaby Chesterman
Recent turbulence in the stock markets has greatly shaken investor confidence according to a recent survey suggesting almost as many people are feeling the blues as those relishing the future
Bulls recovered sufficiently in the last week of March to outnumber bears by 1.12 to one, having hit an all-time low ratio the previous week. Despite that rise, first quarter results still demonstrated that investor confidence has been badly shaken in the last year.
Those getting a little bit confused, bear with me (excuse me). The latest World Investor Link Investor Confidence Index, released in April, found that investors ended the first quarter on a slightly more positive note after hitting an all-time low during that period. Even so, the ratio was considerably down on the same period last year and had also slipped a long way since the end of January.
The index is created from a survey of World Investor Link customers as they research investments through the company’s annual reports service and fund information service. Customers are asked whether their current attitude towards the stock market is ‘bullish’ (positive), ‘bearish’ (negative) or ‘neutral.’ The index is then calculated as a ratio of bulls to bears, from a sample varying from 500 to 1,500 participants.
The index at the end of March, 1.12, means that there was slightly more than one bull for every bear, suggesting that only a small portion of investors feel confident than those who feel despondent. The previous week’s all-time low of 0.87 meant that a lot of faith had been lost and that there were actually more investors in the market feeling trepid towards future prospects than those looking forward to prosperity.
Yet despite that small rise, the ratio during the same period last year was 5.5 and at the end of January this year there were almost three bulls for every bear. The results will come as little surprise to investors who have increasingly lost throughout the turbulent last year, particularly since the spectacular technology stock crash last April. Twelve months on and the stock market is still showing few signs of recovery.
“There’s no doubt that investors are still worried about the direction the stock market will be taking in the near term,” said World Investor Link chief operation officer, J. Patrick Galleher. “Investor confidence is one of the first things shaken in an economy, and it’s one of the first things that has to change before the market can rebound.”