Retail Investors Are More Upbeat: Here’s Where You’re Seeing Opportunities.

Retail Investors Are More Upbeat: Here’s Where You’re Seeing Opportunities.
Daniel Johnston

11 months ago5 mins

  • You’re being more cautious right now after all the recent market turmoil, but most of you are still investing.

  • Most of you still think stock markets will be higher in 12 months, although your opinion on crypto is less clear-cut.

  • And of all the investment themes you’ve got your eye on now, one stands out above the rest: AI.

You’re being more cautious right now after all the recent market turmoil, but most of you are still investing.

Most of you still think stock markets will be higher in 12 months, although your opinion on crypto is less clear-cut.

And of all the investment themes you’ve got your eye on now, one stands out above the rest: AI.

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There’s no question we’ve seen some major turbulence in the market this year. And, if nothing else, it’s made for some interesting reading with the latest results of our quarterly Modern Investor Pulse. We checked in with 1,700 of you around the world to ask how you’re feeling about markets and what you’re planning for the year ahead. Here’s what you told us…

You’re being more careful right now.

This year started off well for markets, with the S&P 500 rallying around 10% in the first month of the year. There was a ton of optimism about global economic activity, with China dropping its Covid-zero policies and central banks seeming to gravitate toward smaller interest rate hikes. But how quickly things can change. In early March, Silicon Valley Bank collapsed, setting off a chain reaction of fear in the banking sector, muddying the waters for global central banks on the path for interest rates, and sparking renewed recession fears to boot. So all that investor confidence – and the market rally – fizzled out pretty quickly.

It wasn’t just individual investors who started to feel queasy: the latest Bank of America Global Fund Manager survey checked in with 212 fund managers (overseeing $548 billion in assets between them) and found that sentiment is close to two-decade lows. It’s no surprise then that the recent temperature change has got you taking a more cautious approach too, with 58% of Finimizers planning to take less risk with their investments over the next three months, treading carefully until things settle down.

Responses to “How is the current market impacting your decision-making?” Source: Finimize.
Responses to “How is the current market impacting your decision-making?” Source: Finimize.

For about half of Finimizers, this isn’t your first rodeo: you’ve got five or more years of experience under your investing belt. And 42% of you are still continuing to invest as normal. That’s promising: keeping consistent, not trying to time the market, and even doubling down during periods of turmoil can serve long-term investors well – as long as they have done their research and have conviction in their investments, of course.

But your longer-term view is rose-colored.

Despite feeling more leery of late, 64% of you are still planning to invest between $1,000 and $50,000 in the next year. And more of you are planning to plow that surplus income into risk assets: 84% of you said you’ll be investing in stocks this time around, compared to 72% when we asked three months earlier.

That ties in with the fact that 68% of you expect global stock markets to be higher 12 months from now – the most optimistic you’ve been in our surveys since 2021. Analysts are widely split on this one, mind you, and reckon stocks’ fate will rely on whether a recession does set in and what the world’s biggest central banks do over that period (i.e. if they end up cutting interest rates later this year as some traders are expecting).

Where Finimizers plan to invest surplus income over the next 6-12 months. (Multiple answers were allowed). Source: Finimize.
Where Finimizers plan to invest surplus income over the next 6-12 months. (Multiple answers were allowed). Source: Finimize.

ETFs cropped up near the top of your investment shopping list too, and that’s encouraging just in case things do go south: they allow Finimizers to get broad exposure to sectors, geographies, and entire markets – diversifying moves that could turn out to be savvy ones in choppy times like these.

But crypto’s definitely tumbled down the list for you: dropping to sixth place in the latest survey, from third in the one before. That might just be down to some of you taking a more cautious approach and opting instead for the typically safer investments of real estate, cash, and bonds. So, while the whole debacle in the banking sector did help propel bitcoin from the lows of last year, Finimizers are pretty much split 50-50 on whether the OG cryptocurrency will be higher in another 12 months.

Big Tech is still big time.

As for which investment themes are on your radar right now, one trend sticks out head and shoulders above the rest: artificial intelligence (AI). Sure, as a group, you’ve invested most in Big Tech over the past quarter, slightly more than in AI itself, but that’s probably at least partly because these titans are helping spearhead the development of the technology, both through tasking wide swathes of their vast workforce on the topic and investing their massive cash piles in exciting upstarts like Microsoft did with OpenAI.

For what it’s worth, Goldman Sachs is also betting on some of tech’s usual suspects to be the biggest gainers from AI, integrating it into existing offerings, allowing for better cross-selling opportunities, and ultimately improving customer retention. But while the investment bank has been touting AI’s ability to boost productivity – and global economic growth – the truth is the timing is still very much up in the air. In fact, it brings to mind something called “Amara’s Law” – the idea that people tend to overestimate the impact of new technology in the short term and underestimate it in the long run.

With the technology seemingly still in its infancy then, the real fruits of AI are likely to come later, and that shows in the difference between how you’re investing in the space and how you’re using the tech itself. Case in point: while most of you are planning to invest in AI stocks in the next six months, around two-thirds of you don’t plan to make use of AI to help make investment decisions.

The themes Finimizers say they’ve invested in the most over the past quarter. (Multiple answers were allowed). Source: Finimize.
The themes Finimizers say they’ve invested in the most over the past quarter. (Multiple answers were allowed). Source: Finimize.

Of course, Finimizers know better than to put all their eggs in one trend basket, so you’re investing in a wide range of them. Those include the energy transition (something the world’s superpowers are increasingly accelerating) and emerging markets (a popular trade for the pros given the attractive valuations compared to the West, and far less restrictive borrowing conditions in places like China). That shows you know the importance of holding a diverse portfolio, minimizing the overall swings, as gains in one area offset falls in others.

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Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

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