Retail investors say stock market will bottom in 2023: Finimize survey

LONDON — Retail investors haven’t been frightened away by the comedown in stocks this year.

In 2023, most individual investors plan to invest the same amount or more despite the cost-of-living crisis, according to a new survey from London-based investing insights platform Finimize.

Only 1% of retail traders say they plan to sell off their investments in the new year, the Finimize survey said, while 65% will continue investing and 29% plan to add to their portfolios.

“This data is proof that even in the current market environment, the majority are seeing volatility simply as part of the economic cycle thanks to access to information and growing experience with investing,” said Max Rofagha, Finimize’s CEO, in a press statement Wednesday.

“Additionally, it is clear that the retail investor narrative is changing. For example, previously there has been a focus on how a tiny population of day traders is behaving.”

The survey of over 2,000 retail investors across Europe, Asia and the U.S., found that over 80% of retail investors think the worst of the stock market rout will be over within six months.

The majority (72%) of the traders plan to back individual stocks next year, with 64% favoring Big Tech names like Apple, Microsoft, Google and Meta.

Meanwhile, 38% of retail investors plan to invest in crypto, even amid the fallout from the collapse of Sam Bankman-Fried’s crypto exchange FTX.

About 56% of traders believe that bitcoin will be higher, vs. 44% who think it will trade lower. Most retail investors (58%) would invest more in crypto if it were more regulated.

Without a doubt, the biggest financial concern among retail is the cost-of-living crisis. Consumer budgets are being constrained by high inflation, and that’s been a blow to stocks as central banks raise interest rates to tame soaring prices.

More than half (55%) of retail investors said their biggest financial worry right now was the rising cost of living. Close behind that was higher interest rates, with 28% of traders citing this as their biggest fear.

The role of retail investors in influencing the market was thrust into the headlines last year after a community of avid novices on Reddit and other social platforms drove up shares of U.S. gaming retailer GameStop.

Despite this, so-called “meme stocks” aren’t a focus for most retail investors, according to Finimize, with 84% having never invested in a meme stock.

“GameStop mania was a flash in the pan, recent attempts to organize a similar move have struggled to gain traction,” Max Rothery, vice president of community at Finimize, told CNBC.

“As the environment becomes more uncertain, we expect retail investors to have lower trading volumes but continue to invest.”

The retail investment community is set to account for 61% of all assets under management globally by 2030, up from 52% in 2021, according to wealth management strategy consulting firm Indefi.

Finimize says it has more than 1 million users worldwide. The company was acquired by asset management giant Abrdn, formerly Standard Life Aberdeen, late last year.