Still, investors are significantly more likely to “buy the dip” than “sell the rally”
New research from StreetWise, the E*TRADE quarterly tracking study of experienced investors
January 14, 2019 — NEW YORK–(BUSINESS WIRE)–E*TRADE Financial Corporation (NASDAQ:ETFC) today announced results from the most recent wave of StreetWise, the E*TRADE quarterly tracking study of experienced investors. Results show that the majority of investors are bearish amid market volatility, gridlock in Washington, and global growth concerns.
Bears take the day
Bearish sentiment rose 16 percentage points, to 54%—one of the biggest quarterly increases in the past three years.
Trade concerns loom large
Nearly three out of five investors feel China and trade tensions pose the most risk to their portfolios (59%), followed by Fed rate hikes (38%), and gridlock in Washington (33%).
They feel volatility is the new normal
More than nine out of 10 investors (91%) believe volatility will rise or stay the same in Q1.
But the majority still give the economy a passing grade
The majority of surveyed investors (55%) give the economy an A or B grade.
“Buy the dip” mentality still rules
Four out of five investors (79%) say their strategy is to buy the dip, likely to take advantage of recent market volatility. On the other hand, one out of five investors (21%) prefer to sell the rally.
Volatility & Global Slowdown
“Volatility and concerns of a global slowdown are clearly on the hearts and minds of investors today,” said Mike Loewengart, VP of Investment Strategy at E*TRADE Financial. “That said, we’ve seen tremendous momentum over the past few years, and ebbs and flows are a natural part of the market. It won’t always go in one direction like it did for many years up until 2018. In the current state of play, it’s important to remember that, at least for now, our foundation is strong—economic fundamentals like employment and GDP continue to show resilience.”
The survey also explored retail investors’ views on sector opportunities for the first quarter of 2019:
- Health care
Half of all surveyed investors see opportunity in health care, which is traditionally viewed as a more defensive sector. - Energy
Two out of five investors see opportunity in energy this quarter amid the recent rally in crude oil. - IT
This sector dropped two places from the number one spot last quarter as device production slows. Yet it remains a top choice, as investors may be seeking bargains.
E*TRADE aims to enhance the financial independence of traders and investors through a powerful digital offering and professional guidance. To learn more about E*TRADE’s trading and investing platforms and tools, visit etrade.com.
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| When it comes to the current market are you? | |||||||||
| Total | |||||||||
| Q1’19 | Q1’18 | Q1’17 | Q1’16 | ||||||
| Bullish | 46% | 68% | 64% | 45% | |||||
| Bearish | 54% | 32% | 36% | 55% | |||||
Which of the following risks are you most concerned about | |||
| Total | |||
| Q1’19 | |||
| China and US trade tensions | 59% | ||
| Fed raising rates | 38% | ||
| Gridlock in Washington | 33% | ||
| Weakness in the tech sector | 20% | ||
| Flattening yield curve | 17% | ||
| Weakness in the housing market | 13% | ||
| Brexit | 9% | ||
| Other | 5% | ||
| None of these | 4% | ||
Over the next quarter, do you think volatility will… | |||
| Total | |||
| Q1’19 | |||
| Greatly increase | 16% | ||
| Somewhat increase | 42% | ||
| Stay the same | 33% | ||
| Somewhat decrease | 9% | ||
| Greatly decrease | 0% | ||
What grade would you give the current state | |||
| Total | |||
| Q1’19 | |||
| A | 14% | ||
| B | 41% | ||
| C | 32% | ||
| D | 10% | ||
| F | 3% | ||
If you had to choose, would you say your trading strategy | |||
| Total | |||
| Q1’19 | |||
| Buy the dip | 79% | ||
| Sell the rally | 21% | ||
| What industries do you think offer the most potential this quarter? (Top three) | |||||||||||
| Q1’19 | Q4’18 | Q3’18 | Q2’18 | Q1’18 | |||||||
| Health care | 50% | 44% | 41% | 46% | 41% | ||||||
| Energy | 40% | 42% | 43% | 41% | 47% | ||||||
| Information technology | 38% | 49% | 45% | 44% | 45% | ||||||
| Financials | 36% | 40% | 41% | 40% | 43% | ||||||
| Consumer staples | 30% | 21% | 19% | 24% | 17% | ||||||
| Utilities | 29% | 23% | 24% | 22% | 19% | ||||||
| Communications services | 23% | 21% | 27% | 24% | 23% | ||||||
| Industrials | 20% | 21% | 22% | 22% | 29% | ||||||
| Consumer discretionary | 17% | 22% | 19% | 18% | 15% | ||||||
| Materials | 16% | 17% | 20% | 20% | 21% | ||||||
Referenced Data
About E*TRADE Financial and Important Notices
E*TRADE Financial and its subsidiaries provide financial services including brokerage and banking products and services to retail customers. Securities products and services are offered by E*TRADE Securities LLC (Member FINRA/SIPC). Commodity futures and options on futures products and services are offered by E*TRADE Futures LLC (Member NFA). Managed Account Solutions are offered through E*TRADE Capital Management, LLC, a Registered Investment Adviser. Bank products and services are offered by E*TRADE Bank, and RIA custody solutions are offered by E*TRADE Savings Bank, both of which are national federal savings banks (Members FDIC). More information is available at www.etrade.com.
E*TRADE Financial Corporation and Research Now are separate companies that are not affiliated. E*TRADE Financial Corporation engages Research Now to program, field, and tabulate the study. Research Now Group, Inc. provides digital research data and has locations in the Americas, Europe, the Middle East and Asia-Pacific. For more information, please go to www.researchnow.com.
About the Survey
This wave of the survey was conducted from January 2 to January 10 of 2019 among an online US sample of 910 self-directed active investors who manage at least $10,000 in an online brokerage account. The survey has a margin of error of ±3.20 percent at the 95 percent confidence level. It was fielded and administered by Research Now. The panel is broken into thirds of active (trade more than once a week), swing (trade less than once a week but more than once a month), and passive (trade less than once a month). The panel is 60% male and 40% female, with an even distribution across online brokerages, geographic regions, and age bands.
