Home Individual Stocks Were Q2’s Go-to Investments For 69% of Traders
Individual Stocks Were Q2's Go-to Investments For 69% of Traders

Individual Stocks Were Q2's Go-to Investments For 69% of Traders

  • Published: 8th August 2022, 09:33

When you invest in a stock, you essentially buy a piece of a company. You become a shareholder, and your goal is to make money by selling your shares for more than you paid. Individual stocks are just one of the many different types of investments that you can make with your money.

According to a MoneyTransfers analysis, individual stocks were the go-to investments in Q2 2022. The site has presented data showing that 69% of investors moved their money into individual stocks, the highest for any investment tool. 

An individual stock is a type of investment that represents ownership in a single company. When you buy shares of an individual stock, you are buying a small piece of that company. For example, if you invest in Apple or Netflix, each of these companies would constitute an individual stock. 

Increasing Confidence About The Stock Market

MoneyTransfers’ CEO Jonathan Merry has been explaining the figures. He affirms,

The main reason for this shift is that investors were becoming increasingly confident in the stock market and were looking for ways to get more exposure. Besides, Individual stocks provide greater control over where you invest and tend to be more tax-efficient.

MoneyTransfers’ CEO Jonathan Merry

Merry further attributes that shift to the underperformance of many funds. That had led investors to seek other options that offered the potential for higher returns. And individual stocks offered a higher potential return than most funds, which made them an attractive option for many.

Other Leading Investment Vehicles

The top two investment tools traders preferred most in the survey were investment portfolios and ETFs. The former saw 53% of the traders put in money while the latter attracted funds from 45%. 

Investment portfolios offer traders the ability to trade a wide range of assets, including stocks, bonds, and cash. On the other hand, ETFs expose traders to a basket of assets without having to trade each security.

Inflation is a Major Concern

Most traders had a bearish outlook on the second quarter of 2022. Just 43% felt it was a good time to invest, while 53% had a bearish outlook. So what was behind this negative sentiment? 

One possible explanation is that many traders were concerned about the potential for inflation picking up in the second quarter. Up to 20% of the traders had cited it as their number one worry. Rising inflation would likely lead to higher interest rates, which could pressure stock prices.

Another possible reason for the bearishness is that some traders felt that the market had gotten ahead of itself in recent months and that a correction is overdue. 

The Bulls and The Bears

The energy sector has recently been among the best performers, and traders were betting that the good times would continue. Energy stocks benefited from strong global economic growth, low-interest rates, and tight crude oil supplies. 

In contrast, traders were pretty bearish on real estate and consumer discretionary stocks. The housing market had been showing signs of cooling off then, and many consumers were feeling the pinch of rising inflation and interest rates. 

Which Is the Best Hedging Tool?

When it came to hedging against risk, investors had many options. Cash investments were the most popular hedge for geopolitical risks like war or political upheaval. This is because cash is liquid and can be quickly converted into other assets if needed.

And regarding inflation, the most popular hedge was real estate. That’s because real estate tends to increase in value as inflation rises to serve as a valuable store of wealth. Of course, there were many other ways to hedge against geopolitical risk and inflation, but these were two of the most popular options.

Elizabeth
Written by
Elizabeth

Elizabeth is a financial journalist working in global markets across the world. Specialisms include personal finance and property.