Investors regret pandemic selling: survey
Meanwhile, half of investors hoped to cash in on COVID with pandemic-related stock buys.
Panic selling at the start of the pandemic hasn’t paid off for investors, according to a survey by MagnifyMoney, LendingTree’s personal finance platform. Since mid-March, 42% of investors sold at least one stock, the survey of 1,000 investors found, and almost a quarter sold everything. Most wanted to have access to cash in case of a recession, and over a third wanted to get out before a serious crash.
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“It turns out, though, that most investors regret their choice to sell shares,” Sarah Berger, a staff writer for LendingTree, wrote in a blog post announcing the results. “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.”
Of investors who unloaded some stocks, 88% regret it, and most of them are really unhappy about their decision. Almost half — 48% — have lost money, and almost a third have lost more than $5,000. Only 23% say gains offset what they lost.
More than half of investors bought new stock specifically to capitalize on the pandemic. Investors had more confidence in tech stocks like Zoom or Slack than health care companies: 58% opted for tech stocks, compared to 33% who invested in companies like Pfizer or Biogen.
An ongoing challenge for investors may be a tendency to check their portfolios too frequently. The survey found those who check their portfolios more often were more inclined to make changes to it. That’s especially true of people who have lost money in furloughs or layoffs caused by the pandemic, according to the survey.
Related: Managed accounts can save virus-panicked retirement savers from themselves
“Those whose income was impacted by the pandemic were more likely to report checking their investments more frequently compared to those who didn’t experience income loss,” Berger wrote.
In an interview with BenefitsPRO in May, Michele Walthert, managing director of Wealthspire Advisors, said that ideally, investors’ portfolios would already be allocated to their risk tolerance so they can stand to sit tight.
“Generally speaking, risk tolerance should not change constantly as things change around us,” she said. “However, after over a decade of positive market performance, it is not unusual for investors to have started the year with an allocation more aggressive than their true appetite for risk.”
Investors may need help accurately judging their appetite for risk in lean times, as Walthert noted they often overestimate their appetites when markets are rising.
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