The investment havens of stocks and property have lost their luster for a plurality of investors polled by Rasmussen.
The survey finds that for the first time ever, more investors would rather put new money into a savings account than on Wall Street or in real estate.
Data from the Rasmussen Reports Investor Index shows that nearly one-third of investors (32%) would now place any new money in a savings account. Twenty-nine percent (29%) would invest in real estate, and 20% would opt for the stock market.What we are faced with is not, at its core, a liquidity crisis or a credit crisis. It is a crisis in confidence.
A year ago, real estate was the choice for 31% followed closely by investing in the stock market at 30%. In November 2007, only 18% said they would put new money in a savings account. Presumably, those who put their money in a savings account last November are happier with the results than those who invested further in the stock market.
The number choosing the stock market fell from 30% a year ago to 26% six months ago to 21% last month and 20% now.
During that time, the number preferring to leave their money in a savings account increased from 18% last November to 21% in May, 29% in October and 32% now.
The result of the deregulatory mania that took hold during the conservative era is that nobody can be sure what anything is worth. The government abdicated its responsibility to enforce transparency and accountability in the marketplace. Investors understand that playing the market is, at its essence, gambling. But they count on the house not to cheat, or to let other players cheat. Everybody wants a fair chance to win. As soon as you realize the deck is stacked against you, you don't want to play anymore.
That is why each new day brings worse news on Wall Street. People with money to invest don't trust the market anymore. The government allowed insiders to rewrite the rules in pursuit of short-term profit. A small group of profiteers took their money and got out, leaving everyone else to clean up the mess. Now, nobody is willing to gamble again until they get a sense that they have a fair shot at winning.
There will be no end to this crisis unless and until the government steps in with strict rules for transparency and accountability in the markets.
Investors are already willing to settle for savings account interest for their money. If the situation gets any worse, they'll start sewing it up inside their mattresses.
