Trading activity is reaching record levels at discount brokerages, as increasing numbers of mutual fund investors give up the ghost on long-term investing, The Wall Street Journal reports. About 20% of online investors, or 7.5 million people, have increased their trading levels, according to TowerGroup.
Indeed, this may be signaling new investor sentiment, since in previous bear markets, investors have retreated from all forms investing, including stock trades.
The psychology of the market is broken, explains Michael Parness, founder of Trendfund.com, an online trading community. People just dont trust it and see that most of the markets recent movements have been tied to government actions. Some investors are waiting until free enterprise returns and companies demonstrate solid earnings before committing to a long-term outlook.
As one investor, Mark Swenson, put it, I could no longer stomach watching my money disappear. For right now, its a traders market. Until I get a sense that the market is on the rise, I generally dont plan on doing any buying and holdingnot for the long term.