More than half of U.S. affluent see ongoing trouble for the market in 2009. PNC Wealth Management thinks it sees a glimmer in the economic gloom that has thrown a shadow across markets, businesses and households the world over. Specifically, it interprets negative data from its most recent annual Wealth and Values Survey of well-to-do Americans as an indication of a market "bottom" in the making.

The headline data point from the survey is that 53% of U.S. individuals with liquid assets of $500,000 or more expect further stock-market declines in 2009.

"These findings represent a bottoming process," says Thomas Melcher, managing director of PNC Wealth Management's multifamily office Hawthorn, which caters to clients with at least $20 million invest. "Markets never bottom when investors are optimistic."

...and waiting...

Adds Melcher: "The number of sellers declines as pessimism rises and it appears that many investors are sitting on the sidelines waiting for a recovery. From a contrarian viewpoint, this is a positive development."

PNC Wealth Management's view that pessimism among affluent investors points to a reversal of a persistent and pronounced market downturn seems shaky. For one thing, the number of buyers is also apt to fall off "as pessimism rises," which -- the absence of a catalyst; say, a shred of good news -- doesn't bode well for a short-term recovery. In addition, the narrow majority he cites doesn't point to the kind of arms-up capitulation that usually signals a down-trend reversal.

In fact, PNC Wealth Management's 2007 survey was a more acute contrarian indicator of short-term market trends than this year's. Then only 4% of respondents to the survey expressed pessimism about their portfolios' performance in 2008 -- a year that, to date, has seen the S&P 500 shed more than 40% of its value.

In this light, it might be more comforting to know that 80% or 90% of the respondents to PNC Wealth Management's latest survey saw more trouble to come in 2009, not just a scant plurality of them.

PNC Wealth Management polled 1,263 adults with annual incomes of $150,000 or more or at least $500,000 in investable assets (or, if retired, at least $1 million in investable assets). The survey universe contains four groups: those with assets of $500,000 to $999,999 (583 respondents), those with assets of $1 million to $4.9 million (492), those with assets of $5 million to $9.9 million (98), and those with assets of $10 million or more (90).

The survey was conducted in September and October 2008.

PNC Wealth Management is part of Pittsburgh-based PNC Financial Services. -FWR

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