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Rich Americans fear attacks, distrust Wall Street

The bear market, terror attacks and revelations about corporate greed have started to worry even the richest US investors.

A vast majority of rich Americans have lost confidence in Corporate America's accounting and Wall Street's stock picks, and they worry terror attacks will hurt the economy and stock market, according to a US Trust survey released on Tuesday.

"That's painting a picture of a lot of uncertainty," Mike Byrum, chief investment officer of Rydex Global Advisors. The degree of uncertainty leads to volatility in the marketplace, he added.

Wealthy investors have good reason to be nervous. On average, their portfolios have fallen 17 per cent since March 2000, the height of the bull market, according to the study. The study polled 150 people with household income of at least $300,000 or a net worth of at least $3.75 million in late March and early April

The collapse of Enron Corp., revelations that Wall Street stock analysts privately derided stocks they touted in public, and allegations that executives used corporate cash as personal piggy banks have rattled the confidence of the wealthy. Some 76 per cent of respondents said they question the reliability of corporate financial statements, and 73 per cent said they do not trust stock analysts' recommendations.

Some 76 per cent worry terror attacks in the United States and abroad will hurt financial markets. At the same time, 59 per cent of wealthy Americans are not planning to change their lifestyles despite concerns about the effects of the Sept. 11 attacks, the study showed.

Two-thirds of the survey's wealthy respondents said they are unlikely to change vacation or travel plans, or spending on big-ticket items, the study said.

"They are very resilient," US Trust President Maribeth Rahe said.

But 76 per cent said they were worried that terrorism in the United States and abroad will hurt the economy and financial markets.

The survey, which US Trust has been conducting since 1993, also showed how the bear market has affected the wealthy. A big majority -- 85 per cent -- said they have seen their portfolios decline in value since the bull market peak.

A slim majority, 52 per cent, said they were not making any changes in their portfolios, and 18 per cent said they viewed the market decline as a buying opportunity. One-fourth said they have sold stocks or moved money into safer investments.

"The findings reflect their views that they are long-term investors," Rahe said.

More than three-fourths, or 78 per cent of the respondents, rated health care, pharmaceuticals and biotech an attractive investment sector, while defense and aerospace received a similar endorsement. Technology, rated the fourth-best sector in last year's survey, slipped back to eighth place. Financial services, rated No. 5 last year, fell back to seventh.

US Trust is a subsidiary of Charles Schwab Corp.

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