Most Traders Don't Like Their Portfolios

If you needed any more confirmation that investors are uncertainly certain about the current state of affairs, a new survey shows that while many are comfortable with the direction of the market, few are happy with the shape of their portfolios.


More than one-third of respondents (38 percent) to a Charles Schwab survey of “active traders” believe the market is heading in a positive direction for the next six months. That is about in line—in fact, somewhat on the pessimistic side—with recent sentiment surveys from the American Association of Individual Investors (47 percent bullish) and Investors Intelligence (56 percent bullish).

The Schwab survey found only 16 percent bearish, well below the other two surveys.

But the most interesting finding was that only about 1 in 7 investors (14 percent) are satisfied that their portfolios have enough hedge against risk.

This is problematic on a number of fronts.

Some 46 percent of respondents say they’re trading options on a regular basis. As we all know, options trading is not for the faint of heart, nor is it for Ma and Pa Investor who are just trying to make some kind of a return while protecting principal.

So if these guys aren’t hedged, that can become a real issue when the market starts getting weird again.

Nearly three-quarters of respondents said they consider volatility a friend, compared to 29 percent who say it is a foe.

For the 86 percent who say they’re not properly hedged, I’ve got news for you: Volatility is not your friend.


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