Updated on Wednesday, September 30, 2020
The coronavirus pandemic has caused chaos in the U.S. economy, and the stock market is no exception. Since March, the stock market has been a roller coaster of volatility, and a new survey from MagnifyMoney reveals that the turbulence is making investors motion sick with regret.
Our survey of nearly 1,000 Americans found that 42% of investors sold at least one stock since the pandemic first began in mid-March, yet nearly all of them regret doing so. We also discovered that selling stock isnâ€™t the only change in investor behavior amid the pandemic, as many consumers bought a stock specifically because of COVID-19.
Our survey found that many investors were fueled by fear to sell stock as the coronavirus pandemic rocked the U.S. economy in mid-March. Overall, 42% of investors said they sold at least some of their stock at the beginning of the pandemic in mid-March. That includes 24% of investors who sold all their stock, as well as 19% who said they sold some.
We found that men were much more likely than women to sell at least some of their stock â€” 56% versus 19% â€” as were younger investors. In fact, hereâ€™s the breakdown by generation of the percentage who sold at least some of their stock:
We also found that people who lost income due to the pandemic (whether by losing their job, being furloughed or having their hours cut) were much more likely to sell their stock.
The No. 1 reason that people started shedding their stock, according to our survey, was that they wanted to have cash on hand in case of a recession (60%). Meanwhile, 35% of consumers said they sold their stock due to fear of a market crash.
Men were most likely to say that the reason they sold stock was to have cash on hand in the case of a recession (66%), while women were most likely to blame fear of a market crash for their reason behind selling (47%). The most popular reason why baby boomers sold their stock at the beginning of the pandemic was unrelated to the pandemic (likely retirement-related, as many boomers are entering their golden years).
It turns out, though, that most investors regret their choice to sell shares. Our survey found that 69% of investors who sold stock at the beginning of the pandemic regret their decision to sell a great deal, while 19% said they regret their decision a little bit. That regret is warranted, as the stock market rebounded in record time from the rock-bottom lows it had reached at the beginning of the pandemic.
Volatility in the market and a potential recession on the horizon can understandably make investors nervous. If youâ€™re constantly peeking at your portfolio and watching your funds plummet in value, it could be tempting to take your money out altogether. However â€” as the findings of our survey suggest â€” selling your stock in response to such volatility can be a costly mistake. Itâ€™s important to take the long view, and remember that the market has always bounced back from downturns.
Not all investors are solely selling stocks, though. A significant chunk of consumers are snapping up certain stocks specifically because of the global coronavirus pandemic, suggesting that people are investing in companies and sectors that are thriving due to these unique circumstances.
Overall, our survey found that 56% of consumers have purchased at least one new stock in the last few months, specifically because of the coronavirus pandemic. The most popular stocks to buy were:
In general, men and members of Generation X were most likely to buy stock because of the coronavirus pandemic.
When it comes to investment selections, we found that men were more likely to purchase tech stocks, while women opted for health care stocks. Meanwhile, millennials and Gen Xers were more likely to invest in tech stocks, while baby boomers were more likely to invest in either health care stocks or mutual funds or exchange-traded funds (ETFs).
Itâ€™s not surprising that tech stocks are particularly attractive in the era of COVID-19. Since mid-March, much of corporate America has shifted to remote work, becoming even more dependent on tech like Zoom and Slack to keep them connected; meanwhile, the race for a vaccine could explain the popularity of health care stocks. Our findings make it clear that investors across the U.S. are keeping tabs on which industries are benefiting from the pandemic, and investing their money accordingly.
Our survey reveals a mixed bag when it comes to how investors are financially performing in the stock market amid the coronavirus pandemic, with:
Still, one clear pattern did emerge: Investors are checking how their portfolios are performing much more frequently during the pandemic. We found that 48% of investors are looking at their portfolios more now than they did prior to the pandemic, while only 16% are checking their portfolios less during the pandemic. In addition, men and younger investors were found to be more likely to say that theyâ€™re checking their portfolios on a more frequent basis.
The findings of our survey suggest that those who are peeking at their portfolios are more inclined to buy or sell stock, potentially in reaction to whichever way the market is moving. However, many experts recommend against frequent trading, and to instead treat your portfolio like you would your face during COVID-19 â€” try not to touch it too much. If you know youâ€™re prone to knee-jerk reactions when it comes to watching your investments rise or fall in value, consider dialing back the amount of times you check your portfolio during times of turmoil.
MagnifyMoney commissioned Qualtrics to conduct an online survey of 997 Americans with at least one investment account. The survey was fielded Sept. 4, 2020 to Sept. 11, 2020.
Generations are defined as the following ages in September 2020:
While the survey also included investors who identified themselves as being from Generation Z (18 to 23) and the silent generation (75 and older), the sample sizes for both groups were so small that findings related to each group werenâ€™t included in this survey.