Schwab's frequent traders see a U.S. recovery over the next 12 months

Broker Charles Schwab (SCHW) recently asked its elite "active trader" clients how they see the economy shaping up. It found that a majority (54%) said they're now feeling bullish enough about business and the stock market that they expect a recovery within 12 months. Another 18% of these high-net-worth clients who make 36 or more trades a year believe the economy could recover in as little as six months.

With such a large percentage of active traders feeling optimistic about the economy, it's not surprising that nearly two-thirds (63%) plan to increase their trading activity in the next six months as well. These are among the results of the latest Charles Schwab Active Trader Sentiment Survey, released on Tuesday. Conducted in October, the survey collected responses from nearly 300 traders.

"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," says Kelli Keough, vice president, 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."

Traders appear to be using ETFs more in their efforts to manage market risk through diversification. The survey found that 55% of respondents are using ETFs, up from 43% in the last survey taken in July, and 17% consider them their preferred investment vehicle.

"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," says Keough.

The survey also showed that most traders find the U.S. market and technology stocks to be very attractive right now. Half of those surveyed said the U.S. market is most attractive, followed by Asia (24%), emerging markets (23%) and Europe (3%). Traders also said technology stocks would lead the market recovery (40%), followed by financial stocks (29%).

While Schwab agrees that the overall outlook for the economy is positive, the company has made calls for caution in recent weeks. Warns Schwab director of trading and derivatives Randy Fredericks: "We're starting to see potential for some consolidation and possibly small pull backs."


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