One in four turn back on shares

Friday, 25 September 2009 07:43

One in four investors are ruling out investing in the stock market.

The collapse in share prices as the global financial crisis ripped through asset values is still leaving people shaking, according to Prudential.

However, the FTSE 100 has risen over 40 per cent from its low-point of 3,512.1 on March 3rd 2009.

Shares have benefited as investors have seen few other avenues for their cash.

The fact the stock market is forward looking has also aided the index, and so while the economy is turning out of recession and still likely to suffer through 2010 and beyond, traders are looking beyond this.

However, small investors are more concerned about losing their investments.

Trevor Cheal, Prudential retirement savings business director, said: "The saying that it is not timing the markets but time in the markets that matters could never be more apt.

"Investors often act irrationally and driven by fear they sit out the markets as they begin to recover, missing out on some potentially spectacular gains."

However, Roger Ramsden, chief executive of Saga Services, explained it was still uncertain if the recent good performance was genuine confidence or "just correcting the 'slough of despond' of recent months".

"But there is one consistent feature and that is that personal investors have traditionally been last to bail out of a falling market; and, having been stung by their losses are more hesitant to invest into the upswing," he said.

He added Saga share service customers had regained some enthusiasm for the stock market.

"Our view is that UK equities offer value to longer-term investors and that the US equity market has also responded positively to unprecedented levels of government stimulus," Mr Ramsden said.

"We think that US equities look likely to outperform the domestic bond and cash markets."

Mr Cheal added: "It is understandable that in volatile markets, investors may not want all their eggs in one basket.

"Those who feel they lack the knowledge to manage a diversified portfolio should consider getting professional financial advice from a stockbroker or an IFA."

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