Fifty-four percent of retail investors plan to buy the current tech dip, and 57% predict the onset of a bull market within the next 12 months, revealed a survey released today by Investing.com.
In the survey of 1,602 American respondents, retail investors’ relative optimism comes despite the notoriously bearish year for financial markets in 2022 and the hugely disappointing quarter for Big Tech. Seventy-six percent of retail investors report that their portfolio has dropped in value during 2022, and 1 in 5 have stopped trading altogether.
Amid continued instability in the market, 90% of retail investors still plan to continue investing in some capacity over the remaining two months of 2022, including 30% who intend to invest “aggressively.”
And while institutional investors are reportedly increasingly abandoning stocks, for 85% of retail investors, their portfolios remain largely comprised of equities (followed by 40% for ETFs, 17% for bonds, 15% for cryptocurrencies, and 13% for commodities).
“A new generation of retail investors, which entered the market at the peak of the coronavirus pandemic, has become conditioned to buy the dip, regardless of market conditions, valuation concerns, and macroeconomic worries,” said Jesse Cohen, senior analyst at Investing.com.
“In many ways, the retail investor has become a more powerful collective force than the professional investor, and they simply don’t care about the same things as the experts.”
Despite a frightful earnings season for technology stocks, retail investors are most bullish on big-name tech stocks in the coming months, including Apple (44%), Amazon (39%), Microsoft (33%), and Alphabet (31%) as stocks with the most upside.
This year, more than half (55%) of retail investors have invested in tech despite the continued dip in the sector, reinforcing the notion that they are poised to continue investing in tech in the months ahead. Thirty-four percent believe that tech is the sector with the most potential in the coming months, followed by commodity stocks (20%).
Investing.com experts believe that the subtext of investors’ optimism is a more hopeful outlook for 2023 in the tech sector.
“While further market volatility into year-end and early 2023 is expected, stocks are poised to stage a strong rebound amid signs that inflation may have peaked, potentially allowing the Fed to pivot on monetary policy and start cutting rates in response to a slowing economy,” Cohen continued.
“Indeed, the stock market has a consistent track record of recovering steep losses and rallying to new records over time.”
In the realm of the cryptocurrency sector, 42% of retail investors say they have decreased their investments or completely pulled out of cryptocurrencies this past year. Only 31% of retail investors who were surveyed now invest in cryptocurrencies — a dramatic decline from the 67% investment rate in cryptocurrencies that Investing.com documented in November 2021 survey. Sixty percent expect cryptocurrency values to plummet further during the next year, and only 12% believe crypto will reach its previous highs.
“Rising interest rates and bond yields have been weighing on cryptocurrencies for most of the year,” said Cohen. “When rates are low, investors are more likely to jump into risk-sensitive assets. However, when rates start to go up, investors become much more sensitive to risk, and that’s what we’ve seen in the crypto market.”
Meanwhile, 29% of retail investors have invested in renewable energy in 2022, exhibiting their faith in one of the only sectors that have actually outperformed or even met expectations in the market this year.