Wealthy Americans Optimistic About Stock Market

Friday, 26 Apr 2013 08:54 AM

By Dan Weil

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The stock market’s romp to record highs in recent weeks has apparently lifted the sentiments of the wealthy.

The Spectrem Group’s Affluent Investor Confidence Index, which measures the investment confidence and outlook of households with $500,000 or more in investable assets, hit a one-year peak this month.

Most of the increase in confidence came from those worth $1 million or more, who said buoyant household income and company health are giving them conviction that the stock market will keep rising.

Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown

And the wealthy have been putting their money where their mouths are. "Equity investment among affluent investors rose in April while cash investing decreased," George Walper, president of Spectrem Group, said.

But among those with portfolios of between $500,000 and $1 million "there is still concern whether the recent stock market rallies are real," he said.

Confidence for both those with investable assets below and above $1 million touched a low last November amid concern about the fiscal cliff. Once the fiscal deal was reached in January, sentiment rebounded.

As for the stock market itself, its moves in recent days have largely been dictated by earnings news. More than two-thirds of the Standard & Poor’s 500 Index companies that have reported first-quarter earnings have beaten profit expectations, according to Reuters.

"Companies have gotten very good at controlling expectations,” Stephen Massocca, managing director at Wedbush Equity Management, told the news service.

“This has been a pattern of crunching down of estimates prior to earnings being released, and when earnings come out, they beat the number."

Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown

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