U.S. investors’ confidence in a variety of aspects of U.S. markets has reached new highs, according to the Center for Audit Quality’s 2014 Main Street Investor Survey.

The survey of roughly a thousand people with at least $10,000 to invest found that their confidence in investing in U.S. public companies was at an all-time high, with 80 percent of respondents reporting some, quite a bit or a great deal of confidence there.

Audited financial information followed closely after that, with 75 percent of respondents reporting similar confidence. While the CAQ doesn’t specifically ask about why they’re confident about  financial statements, CAQ executive director Cindy Fornelli noted, “When they’re asked about who’s best looking after their interests, auditors come in first, with 75 percent citing them.” (Audit committees came in second at 70 percent, followed by financial advisors and brokers, and stock exchanges, both at 70 percent.)

“I don’t know that [these investors] are that well-versed in the intricacies of financial reporting, so some of the technical issues that pop up from time to time may not be as important for them,” Fornelli added when asked about the impact on investor confidence in audited financial statements of the decade-long decline in restatements that a separate CAQ study revealed. “But I think even retail investors have a sense of when something goes wrong, and I think a restatement would be something they would be aware of.”

Confidence in U.S. capital markets, meanwhile, hit 73 percent in the Main Street Investor Survey, though confidence in capital markets outside the U.S. remained fairly low, at 43 percent.

New focus on risk

This year’s survey included a questions aimed at understanding investors’ approach to risk, and which
Just over half of respondents, or 51 percent described themselves as “pretty cautious” (the least-risk-tolerant answer available), while only 3 percent identified as “a real risk-taker,” and 18 percent said they were “real risk avoiders.” The rest, 28 percent, said they were willing to take risks “after completing adequate research.”

Respondents also named the industry sectors they thought were safe and which risky, with energy and technology considered safest, and financial institutions considered riskiest. Health care was frequently cited in both categories.

Regardless of what they think is safe or risky, the polled investors are positive about the direction things are headed. “Confidence in publicly traded U.S. companies is the highest it’s ever been,” Fornelli said. “You see confidence across the board rising since the economic crisis, and they’re citing the performance of the markets. Investors are seeing reasons to feel confident and optimistic.”

For the full report, visit the CAQ Web site.

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