SOX and Investor Confidence

The subprime problem.  The housing market in decline.  The 20 year anniversary of black Tuesday.  You'd think that investors would be running for cover and the stock market would be in precipitous decline.  Think again.  The stock market has had a tough month or so but it still remains substantially above the Enron lows.  High tech stocks have likewise recovered? 

How could this be?  For one thing, there is very high investor confidence.  Take a look at the Investor Confidence Index produced by State Street.  Although there has been some decline in December, investor confidence for most of 2007 has remained remarkably high. 

While there are many reasons for this, certainly SOX has played a role.  Investors generally do not fear that large public companies are rife with fraud and represent Potemkin villages rather than going concerns.