Spectrem Group announced that its Spectrem Millionaire Index declined in September to an all-time low of 5, falling into neutral territory for the first time in 12 months.
Millionaires had been stubbornly optimistic until the September decline, remaining mildly bullish from October 2004 to August 2005 despite the increasing pessimism seen in the overall affluent population. The Spectrem Affluent Investor Index(TM), which measures the investment outlook of households with $500,000 or more in investable assets, remained flat in September at its all-time low of -1. In contrast to the millionaires, the affluent index has been neutral for 10 of the past 12 months. The record lows of both indexes date back to their inception in February 2004.
Affluent investors appeared to be looking past Hurricanes Katrina and Rita in September to longer-term, core issues such as the economy, politics, and oil and gas prices. In a special hurricane-related question asked of affluent investors, 71% said the Gulf Coast disasters would have little or no impact on their investment decisions over the next 6 months. These investors cited the economy, the presidential election and results, and oil and gas prices as the most serious threats to their financial goals.
“It took a while, but millionaires finally have succumbed to the pessimism that has dogged the overall affluent population throughout 2005,” said George H. Walper, Jr., president of Spectrem Group. “All year long, millionaires had represented a source of unusual optimism in contrast to the broader affluent group, which has been neutral since March. However, the September decline in the millionaire index has knocked them out of mildly bullish territory. This represents strong confirmation that the entire affluent population no longer feels very good about the investment environment. And their focus on longer-term issues such as the economy, presidential politics, and oil and gas prices suggests this pessimism may be with us for some time.”
In answer to the special question about the impact of the Gulf Coast disasters on the direction or amount of investments they will make over the next 6 months, affluent investors overwhelmingly chose little (11%) or no (60%) impact.
Responding to an open-ended question about the biggest threat to their household financial goals, affluent investors cited: the economy (15%), the presidential election and results (8%), oil and gas prices (8%), unemployment (6%) and health related issues (6%) as their key concerns. Concern about the economy increased from 13% in June, when this question was last asked, and 10% in March.
An even higher percentage of millionaires (20%) cited the economy as their greatest concern. Ranking immediately behind the economy for millionaires were the presidential election and results (14%) and unemployment (9%).