Investors are “anxious” about the markets, but “aggressive’’ about investment opportunities, Caleb Silver, editor-in-chief of Investopedia, told Yahoo Finance.
“People have a lot of anxiety. So there's this dual thing going on where they're looking up words like ‘forbearance’, ‘foreclosure’, ‘bear market’ , ‘depression’. But at the same time, a lot of them are being aggressive and optimistic and they're looking for opportunities,” he said.
Silver said Monday’s top searches on Investopedia include top oil ETFs, as crude crashed into negative territory. Online searches also show heightened interest in airlines, plus casinos and cruises, which have been heavily beaten amid COVID-19 shelter in place measures.
“On the one hand, there's this fear of the real economy on Main Street, what's happening to me, and then there's the, ‘Where can I invest?’ part of it too,” said Silver.
He says young investors have been the most aggressive, buying into the big tech stocks which have fueled the recent rally. They’re also looking at risk industries like cannabis. “They're buying some of these stocks that have been down 80%, 90% the Tilrays (TLRY) of the world, the Cronos (CRON) of the world,” said Silver. “They're getting aggressive with stocks that have fallen very hard.”
Investopedia uses an ‘Anxiety Index,’ which tracks peer-based searches like ‘bear market’ and ‘depression.’ The index precedes market activity, similar to the Volatility Index (^VIX), which closed at a record high about a week before the markets hit their 52-week lows in March.
“It precedes movements in the VIX because people come to us to learn about what's going on. What does this mean? How do I interpret a payroll protection program? How do I interpret a bear market?,” explained Silver, “Then people usually go and they buy securities based on that.”
Silver says individual investors have been aggressively buying stocks at a discount. “If you look at the online broker trading activity, their buys are outnumbering the sales two to one, even through the worst part of the bear market that we just went through.”
He notes institutional investors have been mostly running to cash. “Some of them have been buying the big tech stocks, as we know there's been some risk-off movement here, but institutions by and large have been running to money market accounts and cash, which are at record levels right now.”
Silver says the crisis is forcing investors to look at new ways of positioning their portfolios.
“Thinking about what stocks have led the last decade or two decades, including the fossil fuel sector, that's just not going to work anymore,” said Silver.
“The stocks that are leading this recovery are the tech stocks that, they're benefiting from the lockdown. At the same time, there's a whole new growth of industries that are going to come out of this that we need to get familiar with to decide how are we going to structure our portfolios,” he added.
Ines covers the US stock market from the floor of the New York Exchange. Follow her on Twitter at @inesreports.