Amidst volatility, experienced investors are
drawing a line between the health of the U.S. markets and the
economy
E*TRADE Financial Corporation (NASDAQ:ETFC) today announced
results from the most recent wave of StreetWise, E*TRADE’s
quarterly tracking study of experienced investors. Results indicate
bearish views towards the market:
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- The majority of investors are bearish
this quarter — at the highest level in more than a year.
- “Dazed and Confused” remains the movie
title that best describes how investors personally feel about the
market this quarter.
When considering the U.S. economy, however, investors appear
relatively positive:
- Four out of five investors rate the
U.S. economy as fair, good, or great, while only one out of five
take a decidedly negative view.
- Nearly half of all investors agree the
U.S. economy is healthy enough for the Fed to enact additional rate
hikes this year.
“A bearish outlook on the stock market can be expected given the
performance we have seen at the start of this year,” commented
George Fischer, SVP, Trading, Margin Lending, and Cash Management
at E*TRADE Financial. “Yet, when coupled with a positive view of
the U.S. economy, short-term market movements can be viewed as
opportunities. Options may be a possible vehicle in seeking to
hedge downside risk or generate income.”
Mr. Fischer offered the following general insights for investors
who feel that options(1) may be an appropriate investment vehicle
for them in a bear market.
- Put options may protect against
downturns. Investors with a long-term bullish view, but who are
also worried about periodic market downturns, may choose to hedge
their long positions by purchasing put options (the ability to sell
assets to another investor at a predetermined price and date). Put
options may offer protection against downside risk in the event
that the underlying position decreases in value.
- Covered calls may provide
income. Writing covered call options (when an asset owner sells
the ability for another investor to buy the owner’s assets at a
predetermined price and date) may generate income if the price of
the underlying asset remains relatively stable or decreases in
value.
- Bear spreads can be a tool to help
balance risk and reward. For investors who are bearish about a
particular stock or the overall market, a bear spread (the
simultaneous purchase and sale of options that expire on the same
date) can be used to reduce downside risk, while limiting upside
potential.
Visit E*TRADE’s Newsroom for the full Q116 StreetWise study
results.
E*TRADE helps investors balance today’s needs with tomorrow’s
goals, through pioneering digital tools and personalized, smart
guidance online and from seasoned financial consultants. To learn
more about E*TRADE’s trading and investing platforms and tools,
visit etrade.com.
For useful insight from E*TRADE and third-party investment
professionals, follow the Company on Twitter, @ETRADE.
About the Survey
This wave of the survey was conducted from January 6 to January
11 of 2016 among an online U.S. sample of 919 self-directed active
investors who manage at least $10,000 in an online brokerage
account. The survey has a margin of error of ±3.2 percent at the 95
percent confidence level. It was fielded and administered by
ResearchNow. The tracking study fields quarterly at the beginning
of each quarter and does not reflect data from the complete
quarter. The panel is broken into thirds of active (trade more than
once a week), swing (trade less than once a week but more than once
a month), and passive (trade less than once a month) investors. The
panel is 65 percent male and 35 percent female with an even
distribution across online brokerages, geographic regions, and age
bands.
Referenced Data
When it comes to the current market are you?
Q1'16 Q4'15
Q3'15 Q2'15
Q1'15 Bearish 55% 50% 44% 41% 34% Bullish
45% 50% 56%
59% 66%
Which of the following do you think is
most likely to occur in the nextthree months? The U.S.
equity markets will... (Question askedbeginning in Q1
’16)
Q1’16 Rise 34% Rise 20% 0% Rise 15% 3% Rise
10% 10% Rise 5% 21%
Stay basically where it is 20%
Drop 5% 23% Drop 10% 16% Drop 15% 5% Drop 20% 2%
Drop
46% If you had to pick a movie title
that best describes how you personally feel about the market right
now, which would it be? Q1'16 Q4'15
Q3'15 Q2'15 Q1'15 Dazed and Confused 34% 38%
29% 25% 27% Easy Rider 14% 18% 20% 26% 25% Pulp Fiction 13% 12% 14%
14% 13% Fear and Loathing in Las Vegas 11% 7% 8% 6% 6% Apocalypse
Now 10% 4% 5% 3% 3% Singin' in the Rain 7% 9% 13% 14% 14% Jackass
7% 6% 6% 5% 6% Raging Bull 4% 5% 6% 8% 7%
How do you think the U.S. economy is doing? (Question
asked beginning in Q4 ’15) Q1’16
Q4’15 Top 2 Box 33% 32% Great 3% 3%
Good 30% 29%
Fair 47% 48% Poor 16% 17%
Extremely poor 4% 3%
Bottom 2 Box 20%
20%
Is the U.S. economy healthy enough for
the Fed to enact additionalrate hikes? (Question asked
beginning in Q1 ’16)
Q1’16 Agree (Top 2 Box) 47% Strongly
agree 7% Somewhat agree 40%
Neither agree nor disagree
28% Somewhat disagree 19% Strongly disagree 6%
Disagree
(Bottom 2 Box) 25%
(1) Options transactions are complex and involve a high degree
of risk, are intended for sophisticated investors, and are not
suitable for all investors. For more information, please read the
Characteristics and Risks of Standardized Options before you begin
trading options. There are specific risks associated with covered
call writing, including the risk that the underlying stock could be
sold at the exercise price when the current market value is greater
than the exercise price the call writer will receive. Also, there
are specific risks associated with buying options including the
risk of the purchased options expiring worthless. Moreover, there
are specific risks associated with trading spreads including
substantial commissions, because it involves at least twice the
number of contracts as a long or short position and because spreads
are almost invariably closed out prior to expiration. Because of
the importance of tax considerations to all options transactions,
the investor considering options should consult his/her tax adviser
as to how taxes affect the outcome of each option strategy.
Commissions and other costs may be a significant factor. An options
investor may lose the entire amount of their investment in a
relatively short time.
About E*TRADE Financial and Important Notices
E*TRADE Financial and its subsidiaries provide financial
services, including online brokerage and banking products and
services to retail customers. Specific business segments include
Trading and Investing and Balance Sheet Management. Securities
products and services, including stocks, bonds, mutual funds,
options, and ETFs are offered by E*TRADE Securities LLC (Member
FINRA/SIPC). Managed Account Solutions are offered through E*TRADE
Capital Management, LLC, an investment adviser registered with the
Securities and Exchange Commission. Bank products and services are
offered by E*TRADE Bank, a Federal savings bank, Member FDIC, or
its subsidiaries and affiliates. More information is available at
www.etrade.com.
The information provided herein is for general informational
purposes only and should not be considered investment advice. Past
performance does not guarantee future results. ETFC-G
About ResearchNow
ResearchNow, a leading digital data collection provider, powers
market research insights. They enable companies to listen to and
interact with the world’s consumers and business professionals
through online panels, as well as mobile, digital, and social media
technologies. Their team operates in over 20 offices globally and
is recognized as the market research industry’s leader in client
satisfaction. They foster a socially-responsible culture by
empowering their employees to give back. To find out more or begin
a conversation, visit www.researchnow.com.
E*TRADE Financial, E*TRADE, and the E*TRADE logo are trademarks
or registered trademarks of E*TRADE Financial Corporation.
© 2016 E*TRADE Financial Corporation. All rights reserved.
E*TRADE Financial Corporation and ResearchNow are separate
companies that are not affiliated. E*TRADE Financial Corporation
engages ResearchNow to program, field, and tabulate the study.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160129005116/en/
E*TRADE Media
RelationsThayer Fox,
646-521-4418thayer.fox@etrade.comorE*TRADE
Investor RelationsBrett Goodman,
646-521-4406brett.goodman@etrade.com
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