Survey: Rich Investors Paralyzed by Fear

Tuesday, 16 Jun 2009 11:15 AM

By Dan Weil

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Wealthy investors are reluctant to step up to the plate and buy securities because they are worried that financial markets will plunge again, a new survey indicates.

Barclays’ private banking unit, Barclays Wealth, contacted 2,100 people around the world with investment portfolios totaling at least $830,000.

More than two-thirds say the risk of declining markets is too high, even though almost 90 percent say opportunities exist for making money in the current investment environment.

“The vast majority of clients recognize that by historical standards there are great opportunities out there,” Philippe Sednaoui, chief executive of Barclays Wealth in Switzerland, told Bloomberg. “

“But they have difficulty deciding whether a new storm will unleash, so they aren’t willing to act.” The survey took place March through May.

Investors apparently weren’t convinced by the stock market’s recent torrid rebound.

“The length and the strength of the rally have been surprising,” Sednaoui told Bloomberg.

“Eventually we’ll see a correction. The question is whether it’ll be more fundamental than technical.”

The world’s wealthy, including people with more than $1 million of investments, probably experienced losses of at least 20 percent in 2008, according to consulting firm Scorpio Partnership.

Some experts see stocks’ recent gains as a bear market rally. Tim Hayes, chief investment strategist at Ned Davis, tells The Wall Street Journal that the bear market “is mature, but can go on for another several years.”

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