Investor Sentiment Strong Despite Volatility: Survey

Active traders have renewed faith in the market despite continued volatility, according to new survey data from Charles Schwab.

The latest Charles Schwab Active Trader Sentiment survey polled nearly 260 individual investors who trade frequently, finding that 8 in 10 respondents have a neutral or bullish outlook for the market in the next six months, virtually unchanged from the last survey in February 2009.

The survey also found:

  • 53 percent expect the economy to show clear signs of recovery within the next 12 months
  • 63 percent plan to increase their trading activity in the next six months, up from 49 percent in the February 2009 survey
  • Despite the recent market volatility, a majority of traders (57 percent) currently hold 30 percent or less of their long-term portfolio in cash or cash investments
  • Exactly half (50 percent) of respondents believe the U.S. market is currently most attractive, followed by emerging markets (32 percent) and Asian markets (18 percent)
  • Traders believe that when the financial markets start to recover, financials (40 percent) and technology (32 percent) will lead the rally.

There was also more evidence that active traders are looking for ways to better manage risk in their portfolios. The number of traders who use exchange-traded funds (ETFs) as a way to gain exposure to sectors or industry trends increased, with 43 percent of respondents saying they are trading ETFs and 28 percent say ETFs are their preferred investment vehicle (up from 24 percent in February 2009).

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"The latest survey results show that trader sentiment is relatively positive despite volatility in the financial markets," noted Kelli Keough, vice president, Schwab Investor Services. "We're seeing continued confidence in active investing as traders further educate themselves, employ increased risk management and use more sophisticated trading strategies across a diverse range of investment vehicles."