E*TRADE Financial Corporation today announced results from the most recent wave of StreetWise, E*TRADE’s quarterly tracking study of experienced investors. Results indicate investors are increasingly wary about what direction the market may take during the remainder of the year:
More than any other, investors choose “Dazed and Confused” as the movie title that best describes how they feel about the market today, and significantly more investors chose it this quarter over last.
Investors are more bearish than any quarter in the past two years, now at half the survey population.
Nearly half of all investors believe the U.S. equity market will experience a correction (drop of at least 10 percent) or a bear market (drop of at least 20 percent) by end of year.
“After an exceptionally long bull market, investors may be bracing for the tide to turn,” commented Michael Loewengart, VP, Investment Strategy at E*TRADE Financial.
Mr. Loewengart offered the following general insights for investors concerned about a market downturn heading into the end of the year.
Dollar-cost averaging can reduce cost basis. Dollar-cost averaging is an investment approach in which investors set a defined schedule for buying into the markets. Weaker markets allow investors to buy more shares when prices are low, and fewer when they are high, enabling investors to potentially reduce the average cost basis.
Diversification can help weather storms. Well-diversified portfolios may be better positioned for changing market conditions, as some industries and instruments tend to be particularly hard hit during market downturns.
Timing the market is difficult. While the current macro environment may paint a picture of global uncertainty, knee-jerk reactions rarely achieve the intended results. Market swings are common, and investors are wise to stay focused on the long term.