The coronavirus pandemic has had varying effects on economies all over the world as countries deal with the prospects of lockdowns and job losses. The US economy is no exception, and their stock market, in particular, has been “a roller coaster of volatility” since March of this year. A new survey of nearly 1000 Americans by MagnifyMoney, conducted by Qualtrics, revealed how this unpredictable market is affecting their handling of their investments.
A key finding from the survey is that many investors were fueled by fear to sell stock as the coronavirus pandemic affected the US 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, with men more likely than women to sell at least some of their stock (56% vs 19%)
The main reason that people started shedding their stock was that they wanted to have cash on hand in case of a recession (60%), with 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. Meanwhile, 35% of consumers said they sold due to fear of a market crash.
However, another key finding of the survey revealed that most investors regret their choice to sell shares, with 69% of investors who sold stock at the beginning of the pandemic regret their decision. That regret could be warranted, as the stock market rebounded in record time from the lows it had reached at the beginning of the pandemic.
Volatility in the market and a potential recession on the horizon can clearly make investors nervous. If you’re constantly watching your portfolio and seeing your funds plummet in value, it could be tempting to take your money out altogether. However — as the survey findings suggest — selling your stock in response to such volatility can be a costly mistake.
Not all investors are solely selling stocks, however, with a significant portion of consumers buying certain stocks specifically because of the global coronavirus pandemic. 56% of consumers have purchased at least one new stock in the last few months, focusing on the sectors that are thriving in these circumstances. The most popular stocks to buy were:
- Tech stocks (like Zoom or Slack)
- Health care stocks (like Pzfier or Biogen)
- Retail stocks (like Amazon or Walmart)
It’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. The survey findings make it clear that investors across the US are keeping tabs on which industries are benefiting from the pandemic and investing their money accordingly.