According to the latest Retail Investor Beat from social investment network eToro, 69% of UK retail investors aim to ride out the current stock market volatility.
The data comes from a survey of 10,000 self-directed investors across 13 countries and three continents.
If eToro’s survey represents the majority of private investors, it seems that long-term investing is alive and well. And that’s great because The Motley Fool has long advocated a buy-and-hold philosophy for owning shares. I hold stocks and shares for years and decades myself. And in doing that I’m aiming to follow the example of great and successful investors such as Warren Buffett and others.
An edge over the institutions
Global Market Strategist at eToro, Ben Laidler, said: “Maintaining a long-term perspective gives you a huge advantage in volatile markets.” And he added that the ability of private investors to hold on to shares could produce “an edge over institutional investors.”
It seems that retail investors are savvier than they’re often given credit for. Laidler reckons the findings of the survey shows that DIY investors do not tend to be “FOMO-driven speculators, or dumb retail money buying high and selling low.”
However, the survey also shows around a third of retail investors cut back on their usual investments during the third quarter of the year. Factors such as the cost-of-living crisis and rising mortgage rates influenced their behaviour.
But the good news is optimism appears to be returning. And looking ahead, only 24% plan to invest less than normal in the fourth quarter.
I think the increase in optimism among private investors has a good foundation. The bear market has driven down the valuations of many decent businesses. There’s good value on offer for those prepared to do the leg-work and ferret out the opportunities. I’d look for businesses with sound balance sheets, fair valuations and the potential to grow their earnings in the coming years.
Bears lead to bulls
Therefore, it could be wise for me to be a buyer of stocks and shares now rather than being a seller. And that’s even though such action may be emotionally challenging. It’s well known that bear markets sow the seeds for the next bull run. So, simply holding tight to existing stocks and entering new positions after careful research could prove to be a sound strategy for me.
I admit this bear market feels horrible. And it’s not easy to watch a portfolio of shares grind lower as the weeks pass. However, five years from now, there’s a good chance I’ll be feeling a lot brighter about my portfolio. And the recent falls and volatility could look like a much smaller blip on the longer-term chart.
There’s no guarantee of positive outcomes from shares. All companies can face operational challenges from time to time. And I could even lose money on my positions over time.
But the risks won’t stop me from investing as usual now. And just like the respondents in eToro’s survey, I’m optimistic for the fourth quarter and beyond.
