"It's not surprising that people have lost money, but nearly one-third (30%) of those we surveyed have had their portfolio decline by 25% or more," said Baie Netzer, investments editor for Quicken.com. "That decline is likely to have a big impact on their planned timeframe for retirement and on their desired lifestyle."

The survey also reveals several fiscally conservative strategies that investors are using in response to the bear market to improve their retirement portfolios. The most popular strategy, employed by 42% of respondents, is to conserve wealth by increasing their cash position. The survey found that not only is this retirement strategy the most popular among those 55 years of age and older, but it is also the strategy favored by the majority of respondents under 44 years old. An additional 36% of respondents have chosen to counter the economic downturn by increasing their low-risk investments. Further, entrusting long-term market corrections to revive their portfolios, nearly one in three (31%) high income Americans are changing nothing about their pre-recession strategy for retirement investing.

While numerous investors have increased the cash position in their retirement accounts, the majority of respondents (64%) have not changed their investment strategy for non-retirement accounts. For the minority of investors who are making changes to their non-retirement investment portfolios, the most popular move (16%) is to increase low-risk investments, followed by an increase in cash position (12%).

In terms of investment portfolio composition, the survey indicates that one in four investors have over 41% of their portfolio invested in stock that moves independent of the major market indices. Further, the greatest number of respondents (34%) deemed 1-12 stocks enough for sufficient diversification, while the fewest (3%) said 41-50 stocks would be needed.

Economic Rebound in Third Quarter
Despite the economic setbacks of 2001, the survey found that while investors have taken a big hit financially, a surprising majority (62%) expect the U.S. economy to emerge from the current recessionary environment sometime in 2002, with the greatest number of those respondents (24.5%) favoring a rebound in the third quarter.

Building on this sentiment of optimism, when asked about the industries that represent the best short-term opportunity for growth, nearly half (49%) of investors polled expect high or extremely high growth in the healthcare sector. The technology industry ranked a close second with 42% of respondents also predicting high or extremely high growth for the sector over the next six months, while the vote for growth in the consumer goods and retail industries came in at 17% and 15% respectively.

According to Netzer, "Although the technology industry has gone through a turbulent two years, the fact that 42% of investors are confident in its short term growth potential indicates that people are taking notice of the technology sector's recent corrections."

Overall, investors seem less confident in the growth of stocks over the next six months. They believe that domestic stocks represent the best potential with 22% favoring value stocks and 21% favoring growth shares. International stocks hold even less allure, with only 11% predicting high or extremely high growth potential in the coming six months. Interestingly, the survey also found that men favor small-cap stocks twice as much women.

Investing Behavior
As Americans wait for the market to improve, the Quicken Fiscal Literacy Survey reveals that nearly one in three (31%) investors are not monitoring their investment portfolios to avoid distress over short-term market fluctuations. An additional 25% have not changed their investment monitoring behavior since the end of the bull market. However, nearly one in five (19%) respondents have begun carefully monitoring their investments to take advantage of opportunity in the market, and 22% are carefully monitoring the market to minimize their losses and preserve their savings.

The survey also reports that nearly two thirds of investors (61%) are only somewhat confident in the ability of actively managed portfolios to outperform major market indices. Netzer comments that, "Uncertain market conditions make it difficult for investors to know whose advice to follow. That such a significant number of respondents are skeptical of the performance of actively managed portfolios suggests that many investors think there is limited opportunity for fund managers to beat the market."

Other Noteworthy Findings

• Boomers Hardest Hit: Retirement plans for high-income baby boomers (ages 45-54 years old) are the most significantly impacted, according to the survey. Nearly half (46%) report that the recession has caused them to delay retirement by three to four years with more than another third (34%) having to push back retirement by five to seven years.
• Youngest Delaying Retirement Longest: An age group breakdown also reveals that investors under 34 years old will need to delay retirement by five to seven years (41%), which suggests that younger respondents hoped to retire earlier than past generations.

NOTE TO EDITORS:
Survey Methodology
The third annual Quicken Fiscal Literacy Survey was conducted by International Communications Research from December 14-18, 2001. The survey was conducted among a random sample of 500 Americans with an annual household income of $75,000 or more and who actively manage their investments. The margin of error was +/- 4.38%.