More bad news in November: When will the free-fall end? | Spectrem Affluent Index

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Affluent Market Insights 2010

Affluent Market Insights 2010

Due to the economic crisis experienced in late 2008 the population of Millionaires in the United States dropped 27%. In 2009, the number of Millionaires rebounded by 16% due to the increase in the stock market. While investors in 2008 were in a panic about market conditions and the economy, today the dust has settled and investors are holding tight to any gains they have received.

Spectrem’s Affluent Market Insights 2010 contains these findings and more to help you effectively serve and understand Affluent investors in 2010.

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More bad news in November: When will the free-fall end?

The Spectrem Affluent Investor Index (SAII)® fell for the third straight month and the Spectrem Millionaire Investor Index (SMII)® fell for the fourth straight month to an all-time low for each. Breaking the usual pattern, the SMII fell 15 points while the SAII fell only 9, but they both ended up at a dismal –39. The 15 point drop for the SMII is the largest drop in the history of the index. There were two previous 14 point drops between February and March 2007, and then again between December 2007 and January 2008. One of the big things pulling down the index was the results for Household Assets, which fell 23.3 points from last month. The affluent are feeling the pull of the holidays approaching and year-end bonuses being slashed across all industries, on top of record unemployment and plummeting housing values. The news of the failure and subsequent bailout of Citigroup and the very public machinations of the auto industry to get federal help did little to bolster the confidence of the affluent investors.

In Investment Preferences, the affluent moved away from Stocks and Bonds and into Cash and Not Investing. Stock investing dropped, particularly for millionaires. Bond Mutual Funds and Real Estate investing both reached new lows this month, while Stocks and Stock Mutual Funds approached their all-time lows as well. Not Investing was up, nearing it’s all-time high of 49.6 as the affluent retreat away from investments in general. In that same vein, Cash investing also rose as the affluent shy away from the daily and dramatic ups and downs of the market. It is difficult to see the affluent jumping back into traditional investment vehicles with any enthusiasm until the economy stabilizes and every week doesn’t bring new news of bank bailouts and failing industries.

The Economy dominated the Perception of Issues this month and probably will for the foreseeable future. Historically, it has increased as a concern for the affluent as the system was seen slowly breaking down. Hopefully it will rebound quickly.

The overall Outlook was not as affected by the economy as it was by Household Assets and Company Health, though all measure fell this month. All measures beg the question, when will there be some good news?

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Wealth Facts...Not Guesses

Pulled from our monthly research, Spectrem's Affluent Investor Index® (SAII) and Spectrem Millionaire Investor Index® (SMII) gauge the investment outlook of households with more than$500,000 of investable assets and $1 million of financial assets.