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U.S. Equities the Top Choice for Investors

February 3, 2015


E*TRADE Financial Corporation announced results from the most recent wave of StreetWise, E*TRADE’s quarterly tracking study of experienced investors.

Results indicate that investors are eager to participate in the market this quarter and are keenly interested in U.S. large-cap equities.

“Investors clearly sense opportunity in the market”
Concerning market sentiment, 66 percent bullish:

-66 percent are bullish, up seven percentage points from last quarter and at the highest level since Q1 2014.

-47 percent — and 60 percent of active investors — agree that the drop in oil prices and therefore lower gas prices result in more disposable income for them to invest in the markets.

Concerning assets, individual stocks most preferred:

-Individual stocks are the most preferred asset class in which to invest, at 68 percent, up 6 percentage points from last quarter and at the highest level since Q1 2014, while investors are most comfortable investing in large-cap U.S. equities, at 61 percent — the highest of any category.

-Equity mutual funds are the second-most preferred asset class, at 60 percent, up 5 percentage points from last quarter.

-Only 29 percent of investors prefer investing in bonds, down 7 percentage points from last quarter and the lowest level since Q1 2014.

Concerning sectors, health care most favorable:

-Health care remains the most preferred sector, with 56 percent of investors preferring it, up 1 percentage point from last quarter.

-Information technology, with 44 percent of investors preferring it, replaces energy as the second most preferred. Energy drops 14 percentage points to 35 percent of investors preferring it.

“Investors clearly sense opportunity in the market,” said George Fischer, VP, Trading, Margin Lending and Cash Management at E*TRADE Financial. “But spotting potential opportunities is only half the battle. The next step is using the right tools to move from ideation to execution.”

For those investors interested in finding the right investments in today’s market environment, Mr. Fischer offered the following:

-Define the universe. Before searching for new positions, form a comprehensive picture of what the right asset looks like for your portfolio. For example, if your focus is large-cap U.S. equities, screeners can help focus your universe by a host of key characteristics, including dividend yield, P/E ratio and industry. In fact, experienced investors rate screeners, which you can find on, as the most useful tool when looking for investments.

-Establish your target allocation. Evaluate the potential suitability, risk and return of a new position, making sure it fits within your larger investment goals and will not overexpose your portfolio to any one sector or asset class. E*TRADE offers both risk and portfolio analyzer tools to help determine proper allocation.

-Pick your entry. While it is impossible to time the market, there are signals that help evaluate when to execute. A combination of fundamental analysis, like research and earnings reports, and technical analysis, like charting, can help you better understand the cyclicality of how a sector or stock interacts with the market and when it may be an appropriate time to engage.

-Manage the position over time. Review and rebalance your portfolio, mapping it back to your target allocation every six months, or as market valuations change. The value and class of the assets in your portfolio will change as the companies that underlie them evolve.