Study: U.S. Investors Sticking with E-Commerce

A survey released Monday by investment firm Scudder Kemper Investments shows that despite slumping share prices, a majority of Americans remain optimistic about investing in e-commerce companies and see these firms as the linchpins of the future American economy.

Optimism aside, however, Americans are still fearful of instability in the sector and are deeply critical of the media’s role in creating the Internet hype.

More Than a Passing Fad

The survey, called “Investing in a Dot-Com World: Americans’ Attitudes and Apprehensions,” was based on a telephone survey of 2,900 adult Americans during a two-week period in April.

According to the firm, 62 percent of respondents said investing in technology stocks is the best way to make money today and nearly 70 percent believe that investing in Internet stocks is more than a passing fad.

Over half believe that it is still prudent to invest in companies that have yet to show a profit and nearly 80 percent said that the CEOs of Internet companies are not too young and inexperienced, debunking a popular line of thought.

On the flip side, however, over 65 percent of respondents said they are concerned about the stability of Internet-based retailers. With the recent tide of failed and failing e-tailers not expected to subside as the dog days of summer approach, that sentiment is not entirely unexpected.

“In the wake of the dot-com investing revolution and today’s wide upward and downward swings in the markets, investors are in an ambivalent state of mind,” said Scudder Kemper Senior Vice President Dianne Michael. “Like the markets in which they are invested, Americans are vacillating between confidence and apprehension, unsure of how all this change will ultimately play out.”

Blame the Media?

The survey’s respondents labeled the media as a culprit in hyping the Internet economy and highlighting all the “get rich quick” opportunities.

Some 75 percent said that the growing number of print, broadcast and Internet-based media outlets focused on the stock markets and the Internet industry are guilty of hyping Internet investing and turning investing into a “form of popular entertainment.”

However, the media might be taking an unfair rap, according to Scudder Kemper. The firm’s survey revealed that 70 percent of investors who invested in technology stocks actually did so based on a tip from a non-professional, and many of the respondents are unfamiliar with the term “New Economy,” a media mantra for the Internet age.

“While many Americans blame the media for creating a hyped atmosphere, we, as financial providers, view these findings as a stark reminder that most Americans still need basic information and guidance about their investments,” said Michael.