Traders work on the floor of the New York Stock Exchange while waiting for the Initial Public Offering (IPO) of shares in the company Apollo Global Management in New York
Traders work on the floor of the New York Stock Exchange while waiting for the IPO of shares in Apollo Global Management, March 30, 2011. REUTERS

Fifty percent of people believe the US stock market will drop more than 30 percent in the next 12 months, according to the latest Chicago Booth/Kellogg School Financial Trust Index poll.

This compares with 41 percent when the same question was asked in December 2010.

Meanwhile, the percentage of Americans who “trust” the stock market dropped to 12 percent compared to 16 percent in December 2010.

A Bloomberg survey also showed that investors are more skeptical about US economic growth and tempering their bets on stocks.

Over the next six months, only 37 percent of US survey participants plan to increase their exposure to stocks, down from 57 percent in the January poll.

Why all the bearishness?

“U.S. stocks will have a 5-to-8 percent decline in the coming months… I see energy and food prices causing a drag on the economy,” Joe Larizza, a director at Vining Sparks IBG, an investment advisory firm based memphis, Tenn., told Bloomberg.

“The latest findings show how fragile and temperamental the country’s financial system is right now, even as we slowly climb out the recession. This drop in trust offers some insight into how global catastrophes can affect Americans’ trust in the financial institutions where they invest their money,” said Professor Luigi Zingales of the University of Chicago.

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