Majority of Americans Have Misperceptions of Stock Market Performance

From Franklin Resources, Inc.
contact Rebecca Radosevich
Telephone (212) 632-3207

Minor revisions were made on September 24, 2012.

Franklin Templeton survey shows two-thirds believe the stock market was down or flat in 2009;

With half feeling stocks are still too risky to invest in, many are not participating in the market’s recovery

San Mateo, CA, April 14, 2010 – A majority of Americans have a false perception of how stock market investments fared last year, and are still uneasy about investing in stocks according to a new survey1 from global investment management firm Franklin Templeton Investments.

The survey of 1,010 respondents shows that 66 percent of Americans believe the stock market was either down or flat in 2009, versus the 22.68 percent2 gain that the Dow Jones Industrial Average actually recorded. Adding to that misperception, nearly 60 percent of respondents believe gold would have provided a better total return on investment than stocks over the past 30 years. In reality, both stocks and bonds provided significantly higher inflation-adjusted returns than gold, although gold, precious metals, and other commodities continue to play an important role in a diversified portfolio3. Franklin Templeton believes diversification is critical to good portfolio construction.

The survey also found that 57 percent of Americans believe stocks are too risky to invest in right now, while 39 percent believe stocks represent a solid investment opportunity. Findings also suggest that women have a more conservative view with 62 percent believing stocks are too risky, and 18- to 34-year-olds were more likely to think stocks are too risky than any of the other age groups surveyed.

“The market decline of 2008 and early 2009 is still fresh in investors’ minds and is stifling their willingness to invest in stocks,” said David McSpadden, senior vice president of Global Advisory Services for Franklin Templeton Investments. “We believe that if investors focus on the longer-term opportunity provided by equities, the case is very compelling, which is one of the reasons we as a firm believe strongly in the value of working with a financial advisor. The misperception that exists right now is translating into a lost opportunity for people working to build their savings.”

When asked where they believe the best stock investment opportunities will be during the next 10 years, 50 percent of Americans believe the best opportunities will be outside the U.S. and 46 percent believe the U.S. represents the best opportunity. Age had a strong correlation to where respondents feel the best stock opportunities will exist, with 61 percent of 18- to 34-year-olds believing the best investment opportunities will be outside the U.S. versus 38 percent for those age 65 and older.

Other key findings from the survey include:

  • 60 percent of respondents believe the Dow Jones Industrial Average will not surpass 15,000 by the year 2020, while 16 percent anticipate that the stock market will go down over the next decade
  • 59 percent of respondents with household incomes greater than $100,000 view stocks as a solid investment opportunity, while 66 percent of those making $75,000 or less believe stocks are too risky
  • 34 percent of respondents are not currently saving for retirement

Visit Franklin Templeton’s web site for more information about “2020 Vision,” an initiative focused on the case for investing in equities in the decade ahead.

It is important to remember that while stocks have historically outperformed other asset classes over the long term, they tend to fluctuate dramatically over the short term. Investors should be comfortable with fluctuations in the value of their investment.

Franklin Resources, Inc. [NYSE:BEN], is a global investment management organization operating as Franklin Templeton Investments. The San Mateo, CA–based company has more than 60 years of investment experience and over $586 billion in assets under management as of March 31, 2010. For more information, please call (800) DIAL BEN® or visit franklintempleton.com.