But the surge in pay is still keeping millionaires on the sidelines.  Simon Mellon, of our new Bonner and Partners Family Office service, has been eyeing the sentiment of high net worth Americans.  And the picture ain’t pretty.

The latest Spectrem Millionaire Investor Index was released on Wednesday. It confirms the gloomy mood of investors. The index is based on interviews with a subset out of 250 high wealth families. After 3 months of growing confidence the index fell 18 points to -20. Its largest fall since it was started 5 years ago. A range of -11 to -30 is “mildly bearish”. This reverses a record 17 point advance seen in May. This shows just how volatile market sentiment is right now. As for their biggest fears, they were split between the economy and the political climate (27% of the vote each).

“Millionaires ended the first half of 2009 with a substantial decline in investment optimism, ending a run of three-consecutive monthly advances that began in March. The broader affluent population also saw optimism fall. With the economy and the political climate ranking as top concerns, the nation’s wealthiest investors appear to be reassessing their springtime optimism as we move into the summer months,” said George H. Walper, Jr., President of Spectrem Group in their Press Release.

This survey echoes what I have been saying about mixed messages in the market. Investors hate uncertainty. The recent strong performance in the equity markets looks like yet another bear market rally. Having lost a substantial amount of their wealth during 2008 the rich are now being more cautious.

I expect a shift of funds back into conservative assets such as cash, gold and fixed income in the second half of the year.

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