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.

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Melanie Garvey Charles Schwab 415-667-0102 melanie.garvey@schwab.com

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