More than Half of Wealthy Investors Expect Dreary Stock Market in 2009

PHILADELPHIA, Nov. 12 /PRNewswire-FirstCall/ -- The number of wealthy Americans who feel pessimistic about the stock market and real estate has nearly doubled in the past year, according to a survey by PNC Wealth Management, a member of The PNC Financial Services Group, Inc. (NYSE: PNC) .

More than half -- 53 percent -- have a gloomy outlook about stock market performance in 2009, the fifth annual Wealth and Values Survey found. Only one in four (25 percent) are optimistic about the market next year.

Despite this prevailing pessimism, however, two-thirds remain confident of the long-term as 67 percent responded, "I feel I have control over my financial future." Exactly half, 50 percent, said, "I am confident I'm on the right track" for retirement and only 15 percent said they will not meet their retirement goals.

"Markets never bottom when investors are optimistic," said Thomas P. Melcher, executive vice president and managing director of Hawthorn, the division of PNC Wealth Management that serves clients with $20 million or more in investable assets. "These findings represent a bottoming process. The number of sellers declines as pessimism rises and it appears that many investors are sitting on the sidelines waiting for a recovery. From a contrarian viewpoint, this is a positive development."

The Waiting Game

The survey of 1,263 wealthy Americans, all of whom had at least $500,000 in investable assets, also revealed that despite a dreary outlook on the stock market, almost two-thirds (65 percent) of the wealthy still like stocks as an investment compared to 18 percent who dislike that asset class.

"Sophisticated investors know that in the long run, valuation drives future returns and the market is cheap on virtually every measure," Melcher said. "Investors may not be happy at the current time, but they realize the market will eventually turn and when it does they are likely to be handsomely rewarded for their perseverance."

White House; My House; Best Bets

The fifth annual Wealth and Values Survey by PNC, which is among the nation's top 20 wealth management firms, also revealed insights about the following issues:

    Economic Concerns High: Almost two-thirds, 61 percent, of wealthy
    Americans are concerned about a recession and 59 percent are concerned
    that inflation will exceed the returns of their investment portfolios.
    About the same number, 62 percent, are more pessimistic in the outlook for
    the U.S. economy in 2009. Only one in four (24 percent), meanwhile, are
    optimistic about their ability to get credit at reasonable rates.

    Change Is Good: Among the wealthy there was an appetite for change in the
    White House. The survey, taken in September, revealed that 40 percent are
    optimistic about the election of a new U.S. president while 26 percent
    were neutral and 34 percent were pessimistic.

    Real Estate Worries: Fifty-seven percent are pessimistic about the outlook
    on the real estate market, about the same as last year (56 percent). In
    addition, half of those surveyed (50 percent) expect a continued decline
    in the value of their primary residence, almost double those (27 percent)
    who believe they will see an increase. One in three (33 percent) expect a
    drop of 5 percent or more. This outlook is the opposite of last year when
    23 percent expected a decrease and 51 percent foresaw an increase in
    value.

    Top Sectors: Asked which sectors have the best chance for gains in 2009,
    the wealthy are bullish on energy/utilities (66 percent compared to 61
    percent last year). Technology remains second but at 51 percent (down from
    59 percent). Health care is third (46 percent versus 53 percent) then
    financial (down to 19 percent from 29 percent).

    Stocks and Mutual Funds Still Have Favor: Stock and mutual funds still
    comprise half of the wealthy's investment portfolios, combining for 49.8
    percent. Other assets classes include: cash, 15.4 percent; bonds, 11.9
    percent; international stocks, 8.0 percent and investment real estate, 7.0
    percent. Private equity (1.5 percent), Exchange traded funds (1.3 percent)
    and hedge funds (0.6 percent) all play significantly smaller roles in the
    wealthy's portfolios.

Survey Methodology

The Wealth and Values Survey was commissioned by PNC to identify attitudes about wealth among high-net-worth individuals, how it affects their lives and their needs in managing wealth. The survey was conducted online within the United States by Harris Interactive(R) in September and October 2008 among a nationwide cross section of 1,263 adults (age 18 or over) with annual incomes of $150,000 or above (if employed), at least $500,000 of investable assets (unless retired) or at least $1 million of investable assets (if retired).

The total sample contains four distinct groups: 583 with assets of $500,000 to $999,999; 492 with assets of $1 million to $4.9 million; 98 with assets of $5 million to $9.9 million; and, 90 with assets of $10 million or more. Figures for age, sex, race, education, region, income, asset level and propensity to be online were weighted where necessary to reflect the composition of the wealthy adult American population. Findings are significant at the 95 percent confidence level with a margin of error of +/- 2.8 percent.

The survey was designed and managed by HNW, Inc. (http://www.hnw.com), a leading provider of wealth marketing software and solutions to financial services companies and intermediaries seeking to capture and serve the high net worth market.

The PNC Financial Services Group, Inc. (http://www.pnc.com) is one of the nation's largest diversified financial services organizations providing consumer and business banking; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; wealth management; asset management and global fund services.

This report has been prepared for general informational purposes only and is not intended as specific advice or recommendations. Information has been gathered from third party sources and has not been independently verified or accepted by The PNC Financial Services Group, Inc. PNC makes no representations or warranties as to the accuracy or completeness of the information, assumptions, analyses or conclusions presented in the report. PNC cannot be held responsible for any errors or misrepresentations contained in the report or in the information gathered from third party sources. Any reliance upon the information provided in the report is solely and exclusively at your own risk.

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