Retail investors optimistic about the stock market

Retail investors optimistic about the stock market

Even as stock markets have come under pressure and professional traders on Wall Street have begun to take a more cautious, if not bearish, view, retail investors appear to be increasingly optimistic.

A full 84% said they planned to invest the same or more than they did in the previous quarter, and two-thirds said they believed equities would rally over the next year.

The survey, which included 1,453 U.S.-based responders among 4,088 retail investors from around the world, took place between Sept. 13 and Sept. 15 and included 1,453 U.S. respondents.

At least three in four American retail investors told Finimize they were planning to take either the same or more risk with their investments over the coming three months, with 60% planning to invest in stocks and 40% planning to put money into exchange traded funds.

The majority of the U.S. investors who participated in Finimize's study said they had thousands of dollars to invest in assets over the next 12 months, with two-thirds saying they had between $5,000 and $100,000 to invest over the next 12 months. Almost 14% said they were planning to invest more than $100,000 in the same period.

It wasn't just America's amateur investors who appeared optimistic in Finimize's poll. Seventy-seven percent of thesurveyed global respondents said they thought stocks would be valued higher this time next year.

Although retail investors were becoming more worried about the possibility of a recession, a separate study published Wednesday by investment platform eToro found that the potential threat was not dampening sentiment.

The eToro survey, which polled 10,000 retail investors in 13 countries to the end of August, found that investor confidence had risen, despite markets experiencing some volatility last month. The percentage of retail investors who told the company they were confident in their portfolio rose to 78% from 71% in June.

More than one in five said that they saw a potential recession as the biggest risk to their investments-almost double the amount they had said in eToro's June survey.

One in three retail investors who participated in the poll said they planned to increase their regular contributions to their investment portfolios over the next three months, with investors more likely to pour money into tech stocks-usually considered high-risk investments-in the fourth quarter than any other sector.

A third survey published by the American Association of Individual Investors recently found that retail investors were beginning to feel bullish about stocks again.

While Finimize, the AAII, and eToro's findings suggest optimism among retail investors, some institutional investors have become more wary in recent times.

The S&P 500 has been a volatile month, with the S&P 500 dipping around 5% since the beginning of the month. While some calculations suggest that the S&P 500 is heading below 3,000 points, it would be a 30% drop from current levels.

The Bank of America said last week that investors were dipping stocks at the fastest rate since the end of 2022, when shares rounded off their worst year since the financial crisis, as many felt the possibility of higher-for-longer rates raised the risk of a recession.

Similarly, Wall Street bulls Goldman Sachs and Citigroup have lowered their year-end price targets for the S&P 500 index.

Bank of America's most recent Global Fund Manager Survey- which polled 222 participants who collectively manage assets worth $616 billion, are not quite 'extremely bearish,' but they aren't feeling bullish either.

In a separate report, the BofA said analysts had predicted the number of jobs that had been lost to the economy over the past few years.

A third of those surveyed by the BofA said they were taking lower-than-normal risk levels. fund managers were taking money out of tech stocks, BofA said - contrasting with the decisions investors said they were making in eToro's recent poll.

A Goldman Sachs report published this week revealed that hedge funds were making longer bearish bets on stocks in recent weeks, with the lender saying its clients were adding short positions and selling off consumer discretionary, industrials and financials stocks.

Morgan Stanley's top strategist, Mike Wilson, told Bloomberg on Wednesday that his team was 5% underweight on equities and was positioning its portfolio defensively.

In a call with Fortune on Wednesday, Max Rofagha, the founder and CEO of Finimize, said the platform's data suggest retail investors are generally more optimistic than professionals.

Finimize's findings suggest retail investors understand the risks associated with the stock market but are confident in their long-term positions, he said.

ve been tracking over the last couple of quarters, people really do understand that they need to have a diversified portfolio, but they also understand that a small portion of their portfolio can be these bigger bets, or these trends that they want to pursue, he said. s really a question of timeline and of proper diversification, and if those two things are properly put in place, I do think that retail investors have a chance to be quite successful.