CEOs Optimistic for 2005

    December 28, 2004

According to a new survey, American business leaders are, hosting office parties and offering year-end bonuses, as they look forward to even rosier business prospects in 2005.

“The Hennessy X.O CEO Survey is one way to take a look at business in the U.S. and, at the same time, to anticipate the coming year,” says John Esposito, CEO of Schieffelin & Co., exclusive importer of Hennessy Cognac. “This year, we’ve also asked America’s business leaders about their concerns for the future and for their advice to small investors.”

The Hennessy X.O CEO survey of 130 chief executive officers of Fortune 1000 companies also offers some advice for small investors to help them reap the benefits of the anticipated uptick in the economy.

A majority of America’s CEOs will spread holiday cheer amongst their employees this season: 64% say their companies will host holiday office parties, while 81% will give year-end bonuses.

Moreover, 71% say their outlook on business for 2005 is more optimistic than it was a year ago, while 24% say they feel about the same about the coming year as they did in 2003, and just 2% are less optimistic than they were 12 months ago.

As optimistic as they are, the majority would still counsel small investors to be a bit cautious when it comes to allocating their money. Fifty-four percent advise maintaining a good balance in their portfolios among stocks, bonds and cash equivalents. A robust 38% say the strong pro-business environment is a good time to increase one’s position in equities, while just 3% foresee a weaker economy and advise a defensive investment posture and/or a strong cash position.

Specifically, say the 76% of the CEOs, the smart investors will keep about 80% of their portfolios in securities and 20% in cash. Seventeen percent recommend a 50-50 allocation; while just 3% advise putting 100% in securities.

If they were looking for new investment opportunities at year’s end, the stocks most CEOs would select include: Hedge Funds (35%), Pharmaceuticals (33%), High Tech (30%), Industrials (30%) and Consumer Goods (29%). Least attractive investment vehicles, say the CEOs, are Communications stocks and Money Markets (6% apiece) and CDs (5%).

Clouds on the Horizon – When asked to name America’s most pressing problem, just over half (52%) of the respondents in this year’s Hennessy X.O CEO Survey cite stabilization in Iraq as the number one issue facing the nation in 2005. Twenty-one percent are concerned about the deficit; 17% say health care is the issue that worries them most; while 5% believe peace in the Middle East is the nation’s biggest worry. Just 2% named terrorism at home as the most pressing issue.

By Invitation Only – Asked how they’ll be celebrating this year, one in five (21%) say they’ll host their own holiday party, while almost a third (32%) say they’ll be going out to lots of soirees thrown by others.

It’s Better to Give than Receive – There’s some good news for the retail sector from the Hennessy survey respondents: 27% say they plan to spend more on gifts this year, and 37% say they’ll spend about the same as last year. Just 10% will spend less. Forty-six percent plan to take time off during the holidays, while 19% say they’ll be working right through the season.

Away for the Holidays – Fully half (54%) of the Hennessy X.O CEO Survey respondents report they’ll be traveling this holiday season, while 46% plan to stay home. Asked where they’d go if they could be anywhere on earth, 30% named warm weather destinations such as Florida, Hawaii, the Caribbean or “anywhere with a beach.” Ten percent would opt for a snowy locale like Aspen or Breckinridge, Colorado, and 6% would like to try London, Rome or another European spot.

Executive Wish List – What are the most desired gifts on their lists this year? Not surprisingly, the most popular gifts come from the sporting goods store: golf equipment, flyrods, shot guns and kayaks, at 11%. Seven percent are dreaming of a flat screen or digital TV, while 6% apiece would like new cars, digital cameras, watches or “good books.”

Executive Role Model – Finally, when asked to name the current American business leader they admire most this year, Bill Gates of Microsoft and Warren Buffet of Berkshire Hathaway tied for first, edging out Fred Smith of Federal Express.

With a rosy outlook and loaded with holiday cheer, America’s CEOs look ahead to a stellar 2005 – and it may just may be a happier new year for everyone who follows their advice, as well.

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