In July, Millionaires and the overall Affluent exercised a cautious attitude after a dramatic climb in June. This cautious stance continued in August with the Millionaire Index (SMII®) going up 6 points from -16 to -10. As a point of reference, the Millionaire Index rose 8, 7, and 17 points in April, May and June. The Affluent Index was (SAII®) even more cautious in August, increasing only from -19 to -18.

The underlying data continues to suggest that investors are moving from the sidelines towards a more pro-investing strategy, but they continue to have questions and concerns about the economy, the present administration and their policies. Those indicating they are “not investing” dropped slightly from 15.1% to 14.6%. Among Millionaires, the drop in those “not investing” was slightly more, going from to 9.4% to 6.5%. (note-the breakout of Millionaires versus non-millionaires is not reflected in the charts.) Those planning to invest in stocks rose from 28.7% to 34.8% with Millionaires going from 35.2 to 44.4. However, Stock Mutual Funds dropped from 37.5 to 34.4. Overall, investing in cash dropped slightly (64.9% to 62.1%) while Individual Bond Investing and Mutual Fund Bond Investing went up (19.1% to 26.1% and 23.9% to 25.7%, respectively).

As somewhat positive economic data becomes available it is possible that these households will begin to brighten their outlook. Seventy percent of these households are reviewing investment information weekly. As they begin to see factual reliable information that they believe they can rely upon, they are more likely to begin to re-invest in the markets. This will have a positive impact on the overall economy.

At the same time, investors are still concerned. While the Cash for Clunkers program appeared to be a success and real estate markets have allegedly bottomed out, there is still uncertainty as to what is ahead. Many of these investors feel that the important question of who is paying for the stimulus and other legislation has not yet been answered. They suspect that it may impact their own financial security. Therefore, until some clarity around this issue has emerged, caution and frugal spending will endure.

Two months of small gains in the overall Indices continues to suggest a more cautious and guarded outlook, but there remains a somewhat positive direction in the area of increased investor confidence.

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