A survey released in May suggests that many Canadian investors see opportunity amid all of the uncertainty. In fact many think that savvy investors will ‘make a killing’. Perhaps the choice of words is unfortunate given the cause of the market stress, but we get the point. But it’s also a double-sided coin given the risks. All said, more Canadian investors are also sticking to their investment plan. That’s good news.
Qtrade Investor teamed up with Angus Reid to take the temperature of investors. The results are quite surprising and encouraging. At the same time I would urge caution. I certainly hope that investors always know what they are doing and understand the risks.
Key findings of the survey:
1) Good News:
Investors are significantly more positive than negative about the markets over the next 12 months.
- Nationally, a super optimistic 11% predicted a quick market rebound.
- 39% said there will be incredible opportunities to buy low.
- 29% said smart investors will ‘make a killing.’
Men are significantly more optimistic about the markets than female investors.
- Male investors (36%) see more opportunity than female investors (22%) for smart investors to ‘make a killing’ during COVID-19.’
- Male investors (45%) see more opportunity to ‘buy low’ than female investors (32%)
“With everyone closely watching their investments during this unprecedented time, it’s reassuring to see such a significant level of optimism from Canadian investors,” said Christine Zalzal, SVP and Head of Qtrade Investor and VirtualWealth®.
Dale observation – There is a certain segment that is incredibly optimistic. And certainly lower prices are usually great for investments. But we do see a split in that 11% feel that there will be a quick recovery. Perhaps they feel that the worst is behind us. They might be counting on a quick vaccine miracle and a quick return to more favourable economic conditions.
I do not share in that opinion. On Seeking Alpha I had penned …
There’s nothing in the numbers or reports from businesses owners and economists to suggest a quick economic recovery. My fear would be that those who are investing based on the hope of a quick recovery may set themselves up for failure. They are not emotionally prepared for a long battle.
On the flip side those 39% who feel there will be incredible opportunities to buy low are signalling that they are prepared for more volatility and more lower prices in the future.
In fact most of that quick recovery is already priced into the markets. We had a quick and violent downturn and a very quick stock market rebound. As I had offered last weekend, the balanced portfolio barely felt a thing.
While no one knows what will happen to stock markets, the economic recovery or business prospects, one should be prepared for a long and difficult battle, just in case. This is no time to be a blind optimist. Some pessimism or acceptance of the severity of it all is prudent – IMHO.
Women are better investors than men.
Once again, we see women being more cautious and less, well manly. That cautious behaviour and more awareness of risks has traditionally led to women creating better returns than men. They are less likely to invest outside of their risk tolerance level – the greatest and most common investor sin.
The bad news.
Nationally, 48% of Canadian investors said that it would take a long time for the markets to stabilize. 40% said they thought many investors would lose money.
- BC and Alberta (52%) are the most negative about the markets and think that ‘many investors lose money’ over Ontario (36%) and Quebec/Atlantic (35%.)
Dale observation – Well of course I actually think that is good news. That almost half of investors surveyed feel that we are in for a long and tough battle. But again that number suggests too many are counting on a quick recovery. You’d be hard pressed to find economists who feel that we are out of this pandemic noose in a hurry.
The stock market recovery in the US is based on the hope of that V-shaped recovery and that miracle vaccine. Everything has to go right. Many markets around the world follow that lead and train of thought. Investment losses will occur for some when that plan does not come to fruition – they will lose patience. And as they survey suggests they will lose money.
We also see that regional bias with much more pessimism out west.
Additional survey insights:
4) Investors are sticking to their guns:
Asked if COVID-19 has changed their investing strategy, 76% of Canadian Investors decisively responded ‘no’ showing confidence in their existing investment strategies. Over twice as many male investors (11%) than female investors (4%) said they were rethinking their investment strategies.
5) Canadians with 100k+ invested are embracing the ‘long game’:
A significantly higher number of investors with 100k+ invested (62%) responded that they are playing the long game over investors with less than 100k invested (47%).
Dale observations – That investors are sticking to their guns is a great reading. From the very beginning of this pandemic I have suggested that if you have a simple plan and you are confident that you are investing within your risk tolerance level – keep on keepin’ on.
I keep harping on the risks because these are the times when investors lose money. Everyone is a genius in a bull market. Unaware investors get crushed in the severe corrections, especially in recessions. We are in a recession with depression-like unemployment and economic numbers.
Be aware. Be ready.
And yes, corrections and much lower prices typically deliver great opportunities.
When we see 47% of investors within a certain segment not playing ‘the long game’. Well, that’s troubling. Investing is a long game. We should be using a 10-year, 15-year, 20-year lens and beyond.
My final thoughts.
They say that severe market corrections return stocks to their rightful owners. I have penned that stock market corrections separate the winners from the losers. This is one the THE MOMENTS that make or break your investment career. This is go time.
Those who have a plan and who are aware will take the monies from those who are ill-prepared and not aware. Metaphorically they will buy Microsoft stock for a dollar and will sell it to you for 50 cents. Rinse and repeat.
Survey background – TORONTO, May, 2020 – According to Canadian investors, COVID-19 may be both the best of times and the worst of times. As revealed in a new national survey conducted by Qtrade Investor (ranked Canada’s top online brokerage in 20191 and 20202) among members of the Angus Reid Forum, Canadian investors are seeing the positives and negatives of investing during a pandemic in real-time.
Thanks to Qtrade Investor and Angus Reid for that survey.
I have been following FiPhysician. He is an expert in the field as an infectious disease doctor. He recently re-posted his first article on the pandemic. Here is …
That is a great read that would have set the pandemic stage for his readers. That said, you can tell that even the good doc underestimated the virus …
So, are you young and able to take on the common cold?FiPhysician
While that was written from the investment perspective, SARS-CoV-2 is certainly not turning out to be the common cold. Not in a health sense, and not for investors.
I had offered my first ‘pandemic piece’ on February 1 …
Yes I was first out of the gate with a prepare theme. Those who would have prepared were retirees, near retirees and those who discovered they were outside of their risk comfort zone.
On myownadvisor Mark offers his May portfolio update. Also here is Mark’s Weekend Reads edition with some great links. I won’t re-post those articles, but they include efforts from Fritz at Retirement Manifesto, Mike from The Dividend Guy and Dividend Stocks Rock, and more.
Our stock portfolio report on Seeking Alpha.
On Seeking Alpha this week I reported no dividend cuts and 8 dividend increases for our 24 Canadian and US dividend payers.
Here’s a very interesting post and comment section that suggests many areas could reach herd immunity well before that often stated 60-70% infection rate. I strongly suggest the comment section for the budding internet epidemiologists in the audience.
And on another topic of the day, Yan Barcelo for Morningstar asks should investors fear deflation or inflation? I say yes. That’s what risk management is ‘all about’.
We may get our own modern version of stagflation is a common theme. Know the risks, prepare accordingly.
Under the sea?
On findependencehub Ian Duncan MacDonald asks will there be a slaughter on the high seas? Is it time to bottom fish for cruise line stocks? I’d say no, to the bottom of the sea you might go. Say hello to this guy for me …
He lives on the bottom of the sea, don’t you know.
Those kind of stocks are directly in the COVID Kill Zone as I have been writing. For those who create their own stock portfolio I’d suggest you take a pass. But hey, it could turn out to be a higher risk home run. That said, the big cruise line operators are burning through some $200 million to $800 million on a monthly basis as they wait to fill up their floating petri dishes.
Reports out of the US and from Robinhood in particular suggest that millennials are loading up on these kinds of stocks. Good luck, wear a life jacket.
GenYMoney goes over her investment strategy for the pandemic times.
By request Dividend Athlete looks at the juicy US dividend telco AT&T.
And here’s an interesting post from Bob at Tawcan on having the right mindset. Of course that applies to all areas of life, including that wealth building process. Our mindset has to match the life plan.
And on lowestrates.ca how to cancel your auto policy. That topic is getting a lot consideration these days with vehicle needs reduced. Don’t forget that you can call to ask for a 15% reduction in policy rates if you are no longer driving to work. But ya gotta ask. They will not simply offer up.
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