Three surveys released last week indicate that investors' expectations for the financial markets have recently declined. Investors' outlooks in June fell to their lowest levels since September and their second-lowest levels since 1996, when UBS and The Gallup Organization began tracking their Index of Investor Optimism. Currently at 72, the index had a baseline of 124 when it was established six years ago. It fell to 50 in September 2001, following the terrorist attacks and reached a high of 178 in January 2000 just before the decline in the Nasdaq 100 and S&P 500.

Today, however, only 38% of investors said they are optimistic for the prospects of the financial markets over the next 12 months, down from 46% in May. Still, investors with less than five years of experience in the markets said they expect a 15.9% return in their portfolio over the next year, compared with a 7.0% return that more experienced investors expect.

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