When I worked for a family office that advised ultra high-net-worth individuals, one of the numerous ways our investment advisers would assess stock market risk among clients was to pose the question: "How would you feel if you lost half your investments?" That question turned out to be more than rhetoric in March, 2009, when the stock market did indeed wind up at approximately half its 2007 high.
Now there's a study that indicates that wealthy clients who believed they were gutsy enough to ride the market bull as well as take a beating from the bear were spot-on in their self-assessment.
Conducted by Harris Interactive for U.S. Bank, the online survey included 1,609 U.S. households with investable assets of at least $1 million. Although 97 percent of the respondents lost value in their investments at some point since the beginning of 2008, only 8 percent exited the market. Nearly half -- 43 percent -- are currently engaged in moderate or heavy buying or selling to take advantage of market opportunities.
Overall, the mood of the study is optimistic. While 20 percent of respondents say their investments have returned to pre-recession levels, 54 percent think it will take up to five years to reach that point, and that same percentage of respondents say they are "very confident or confident" they'll achieve their investment goals over the next six to 10 years.
How do your feelings about the stock market and risk tolerance compare with the results of the survey?
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