According to eToro, 73% of retail investors react to volatility by maintaining their investments or by buying more.
eToro US investment analyst Bret Kenwell joins Wealth to discuss retail investor appetite during the current market volatility.
To watch more expert insights and analysis on the latest market action, check out more Wealth here.
what do we tend to see at times like this when things get even more volatile and what kind of action do you tend to see and are you seeing on the platform?
Well, as it relates to to retail investors in general, I think at first they have a tendency to really embrace the dip. Um, going back into this survey, we asked specifically about holding periods and how long investors, you know, what their timeframe generally is and a majority were in either measuring between years or decades. So this tends to be a group that looks a little bit longer term. And when we're kind of dealing with that, it's in the context of timeframe, it's easier to deal with these sort of periods. Even though this is a hard, you know, period to navigate with volatility, emotions are high. When your outlook is in the years instead of weeks or months, it's a lot easier to embrace a five or 10% correction. If we get into that 15, 20% correction, tiptoe into a bare market, then I think, you know, it it does get a little harder to embrace those dips. We we saw retail's retail appetite for the dip, um, pretty strong, uh, January, February, but I think that appetite has waned a little bit as has patience and as has certainty, uh, really over these last four weeks or so.
Um, and what about when it comes to Big Cap Tech, which has been the thing, um, that has been, you know, probably what retail and institutional investors alike have been most enthusiastic about, the AI trade, etc. Seeing any wavering there?
You know, interestingly, I I personally think that a lot of the sentiment declines in market wide sentiment are tied to tech. Um, when you look like when you look through the first dig through the Q1 results, um, the performance results of the S&P sectors, the majority of them did pretty well. The weakness was really tied to consumer discretionary and tech, which, you know, in this case unfortunately, uh, accounts for more than 40% of the S&P 500. So bulk of the sectors actually outperformed the index itself, um, but that weakness in tech really weighed things down. Now, what's surprising from the survey is how sentiment didn't really waver from, you know, quarter over quarter, uh, confidence in magnificent seven stayed the same. Uh, 48% of respondents expect the mag 7 to outperform the S&P this year. Uh, confidence in AI stocks actually went up quarter over quarter, which again, so when we did this survey was after the deep sea news, after this the volatility in AI, it was once tariffs were on the table. So to not really see the confidence waver in in mega cap tech or an AI was was surprising to me.
