The Covid-19 pandemic is the number one factor impacting
traders’ strategies for the rest of 2021, ranking even above
inflation, Federal Reserve policy, and U.S. / China relations,
according to the latest Charles Schwab Active Trader Pulse survey.
The biannual survey of traders, defined as those who make 36 equity
trades or more per year, delves into what traders see on the
horizon for the markets, strategies and new habits being built in
this ever-changing environment.
With the rise of the Delta variant, one-third say they’ve
already changed their trading strategy. Even amongst those that
haven’t altered course yet, half report they may change tactics in
the coming months due to the risk posed by the next phase of the
pandemic.
When to comes to what those changes are, traders are pursuing a
mix of strategies to shore up their portfolios against Delta:
Top three changes active traders report
making due to the rise of the Delta variant.
Increased overall equities exposure
44%
Increased exposure to cash
37%
Increased overall fixed income
exposure
34%
Most likely changes traders who have
not changed strategies due to Delta, but may in the future.
Increase cash exposure
36%
Decrease overall equities exposure
30%
Invest in more domestic stocks
27%
Traders roll up their sleeves in a complex
environment
Despite concerns about Delta, traders are committed. Nearly all
traders intend to trade the same or more as they have been in the
coming months, and they are investing their time as well as their
money. Almost half of traders (45%) say they are conducting more
research before placing trades than they were before March 2020,
when pandemic-related market volatility shook the market. On
average, active traders spend seven hours researching and more than
five hours pursuing trading education each week. The sources they
use most often to help make trading decisions include: online news
articles and commentary (58%), research reports available through
their trading firm or elsewhere (50%), business broadcast news
outlets (41%) and brokerage firm educational tools and resources
(38%). Despite this year’s social media-fueled trading frenzy, less
than a quarter of respondents reported relying on social media
(23%) for trading education and ideas.
“The last eighteen months has unleashed an influx of new traders
into the market, and as we examine this data, we are seeing traders
new and seasoned alike are attuned to the pressing issues of
inflation and the Delta variant,” said Barry Metzger, Head of
Trading and Education, Charles Schwab. “We’re finding strong
engagement among all traders and a deep commitment to doing the
legwork necessary to actively manage a portfolio. Most traders also
see the retail trading boom that began in 2020 with the start of
the pandemic continuing for some time, though perhaps at a more
moderate pace.”
Traders are also showing themselves to be increasingly nimble
over the wild ride of the last 18 months, and in the facing of
rising headwinds. Compared to before March 2020, more than a third
of traders are trading more on mobile. Additionally, nearly half of
traders are altering their plans at least monthly to adjust to the
changing environment.
What (and Where) to Watch
In addition to their concerns about the delta variant, nearly
all traders reported being concerned about the threat of inflation
(95%), and a vast majority (86%) believe we’re currently in a stock
market bubble. Still, more than a third of traders have reported
feeling bullish on equities in the second half of the year.
Overall, the survey also found overlap between the sectors
traders expect to be most impacted by volatility and those they
think will deliver the best market performance.
Sectors to watch for the second half of
2021, according to traders
Expecting most volatility
Expecting best performance upon
reopening
Financials (37%)
Information Technology (40%)
Healthcare (37%)
Healthcare (31%)
Real Estate (32%)
Financials (30%)
Information Technology (30%)
Energy (29%)
Consumer Discretionary (28%)
Real Estate (25%)
Drilling down into asset classes and investing trends, traders
also shared they are mostly bullish on domestic stocks (65%),
growth stocks (65%) and value stocks (67%). Despite market
outperformance, they are mostly bearish on international stocks
(57%), as well as feeling cautious about fixed income (54%),
cryptocurrencies (54%) and meme stocks (61%).
About the survey
The Charles Schwab Active Trader Pulse periodically checks the
pulse of Active Traders – defined as those making equity trades 36
or more times per year – to uncover their perceptions of current
market conditions, expected trading behaviors and their near-
mid-range market outlook.
Conducted on behalf of Schwab by Logica Research, the study
surveys 500 Active Traders who live in the U.S., are between the
ages of 18-75 and made 36 or more equity trades per year. The
survey was conducted online and was fielded from July 28 – August
4, 2021.
About Charles Schwab
At Charles Schwab, we believe in the power of investing to help
individuals create a better tomorrow. We have a history of
challenging the status quo in our industry, innovating in ways that
benefit investors and the advisors and employers who serve them,
and championing our clients’ goals with passion and integrity.
More information is available at aboutschwab.com. Follow us on
Twitter, Facebook, YouTube, and LinkedIn.
Disclosures
Investing involves risk including loss of principal.
(0821-1KE5)
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version on businesswire.com: https://www.businesswire.com/news/home/20210820005016/en/
Melanie Garvey Charles Schwab 415-667-0102
melanie.garvey@schwab.com
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