Active traders are feeling increasingly more optimistic about the stock market and the U.S. economic recovery, Charles Schwab found in an October survey of 300 active traders.
Fifty percent said they are optimistic about the market over the next six months, up from 34% in July. While 47% were neutral three months before, only 35% were neutral in October. Fourteen percent said they were bearish in October, down from 19% who were so pessimistic in the previous survey.
Sixty-three percent said they will increase their trading activity in the next six months, and 18% expect the economy to show clear signs of recovery in six months or less, up from 7% who thought so in July. In all, 54% believe the economy will recover within 12 months.
“While traders are clearly feeling better about the market, we also find they have not forgotten some of the lessons learned from the recent downturn,” said Kelli Keough, vice president of Schwab investor services. “Traders are taking a much more active role today than ever before when it comes to diversifying their portfolios and managing them against continued volatility and unnecessary risk.”
Fifty-five percent are now investing in exchange-traded funds, up from 43% in July. “We see many traders using ETFs as a relatively easy, cost-effective way to gain exposure to sector or industry trends and to access international markets for diversification,” Keough said.
The survey also showed that 55% have 30% or less of their portfolios in cash or cash-equivalents. They are also very enthusiastic about investments in the U.S., with 50% calling the U.S. market the most attractive right now, followed by Asia (24%), emerging markets (23%) and Europe (3%). Forty percent believe technology stocks will lead the market recovery, followed by financials (29%). In July, the reverse was true, with active traders most bullish on financials (40%) and then technology (32%).