The CEO Poll: Investor beware

Canadian business leaders are cautious of roller-coaster stock markets.

Business leaders give the federal mini-budget high marks.

Uncertainty about the markets is plaguing all investors, even some of Canada’s CEOs. A web poll of 139 business leaders conducted by COMPAS Inc. found the respondents are divided about when — and how — to get back into the turbulent market.

Asked for the advice they would give to a young acquaintance looking to get into the stock market again, 40% of the respondents said now is the right time. The rest of the CEOs said sometime over the next year, while a few even said 2010.

The respondents’ confidence in the economy is also at an all-time low. The COMPAS business leader confidence index dipped to nearly 50 points in the most recent survey, down from more than 80 points just this past summer. The CEOs’ pessimism about the economy helps to explain why their investment advice is particularly conservative.

The poll asked the CEOs how they would recommend a young relative allocate a $500,000 inheritance. Most of the money should go into short-term cash investments and government bonds, according to the panel.

Interest in foreign equities is at an all-time low. The CEOs believe the U.S. has the best economic prospects over the next five years, but still only awarded the country a score of 56 out of 100 in terms of its stability as an investment haven. Western Europe and Japan followed closely behind, while Russia was considered the riskiest place to invest.

The panelists also provided advice on how the government should aid the economy. Many of the CEOs recommended boosting infrastructure spending and warned against explicit bailouts. “Let the market dictate who survives and who doesn’t,” wrote one respondent. “Increase direct investment support in Canadian medium/small manufacturing and core resource industries that have future growth potential,” wrote another.

But governments can only do so much to lessen the effects of a troubled global economy. As one CEO wrote: “All they can do is try to protect Canadian jobs, and that usually ends up in a government deficit, at least for the short term.”