Majority Of Active Traders Bullish On Equities

…but the outlook softens

 SAN FRANCISCO–()–A majority of active traders (54 percent) believe that this is a good time to invest in equities, but bullish outlook for the second half of the year has fallen, according to new data from Charles Schwab’s most recent Active Trader Sentiment Survey from June 2013.

Nearly 38 percent of traders surveyed say they are bullish on stocks over the next three to six months, down from 52 percent in March. While over half believe that equities remain attractive, 37 percent are unsure if now is a good time to invest. And despite solid gains in most major market averages thus far in 2013, many active traders feel they could be doing better. Only a handful (4 percent) would give themselves a grade of “A” on the year-to-date performance of their portfolio. An overwhelming majority (75 percent) believe their portfolio performance deserves a “B” or “C” grade.

Data from the Charles Schwab Active Trader Sentiment Survey were derived from responses of 477 participants in Charles Schwab’s virtual education event on June 20, 2013.

“These results show active traders shifting to a more neutral outlook on the markets in mid-June, likely in anticipation of volatility ahead,” said Kelli Keough, Senior Vice President of Client Experience at Charles Schwab. “In hindsight, we know their outlook was largely accurate as the Fed announced it would likely begin slowing the pace of its bond buying program shortly after this survey was conducted, resulting in a spike in market volatility. In addition, these results show a slight drop in confidence – 58 percent of active traders say they are somewhat or very confident that their portfolios are properly hedged against potential risk, compared to 66 percent who expressed the same level of confidence at the end of the first quarter.”

The recent dip in confidence is driving a renewed interest in education. Keough noted that visits to the Schwab Active Trader Learning Center in June are up 60 percent in the first half of 2013, and content use was up 40 percent in June over the prior year.

The latest Active Trader Sentiment Survey also revealed:

  • Embracing Stocks and ETFs. Survey respondents plan to stay in the market in the next three to six months – for those planning to invest in equities, 77 percent say they plan to purchase individual stocks, 72 percent say they’ll buy ETFs and a quarter plan to trade options.
  • Tech is Tops. A quarter of respondents say they are most bullish on the technology sector, up from just 16 percent in April. Other sectors viewed favorably include healthcare (17 percent), energy (15 percent) and financials (13 percent).
  • Opening Up to Options. Twenty-eight percent of survey respondents say they currently trade options and 11 percent say they plan to start trading options in the next twelve months.
  • Summer Break? Active traders are split on how actively they trade during a summer vacation. Thirty-nine percent expect to keep an eye on their portfolio, but won’t trade much; nearly the same number (38 percent) said the ability to trade anytime from anywhere is a must – vacation or not.
These results show active traders shifting to a more neutral outlook on the markets in mid-June, likely in anticipation of volatility ahead

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