What rally? Investors clueless about market's 2009 performance

Apparently a 24-hour news cycle is still not enough to get the message out to some people, according to a recent survey that showed that 66% of respondents thought that the stock market was flat or down last year. The fact that the S&P 500 gained more than 25% last year was overlooked by two-thirds of the 1,000 respondents to a survey conducted by Franklin Templeton Investments during the last week of March. Just 28% of those surveyed knew that the market was up last year, while another 6% were unable to say whether the stock market was up, down or flat. “We conducted the survey because we wanted to know if investors understood what the market was doing, but what we found was that there is a clear misperception around what the stock market has done,” said David McSpadden, vice president of global advisory services at Franklin Templeton. The survey respondents included a cross-section of American adults, according to Mr. McSpadden, who acknowledged some surprise at the findings. “We understand there is going to be a hangover effect after the market downturn, but that seems to have clouded people’s view of what is actually going on,” he said. “We had some inclination of the negative sentiment out there, but we didn’t expect it would be quite this bad.” The full report hasn’t yet been released, but the portions that were made public yesterday illustrate a dearth of basic economic and financial market knowledge. Nearly 60% of respondents said that they believed that gold would have provided a better total return on investment than stocks over the past 30 years. And, as Mr. McSpadden pointed out, the findings also illustrate how cautious investors have become. When asked about risks associated with investing in the stock market right now, 66% of respondents who make less than $75,000 a year said that the stock market is too risky, and 35% of all respondents said that they aren’t saving for retirement. “The market decline of 2008 and early 2009 is still fresh in investors’ minds and is stifling their willingness to invest in stocks,” Mr. McSpadden said. “The misperception that exists right now is translating into a lost opportunity for people working to build their savings.”