Active Investors Favor a Qualitative Approach to Managing Their Portfolio
Also show strong preference for fundamentals over technical indicators in valuing securities
NEW YORK--(BUSINESS WIRE)--E*TRADE Financial Corporation (NASDAQ:ETFC) today announced results from the most recent wave of its quarterly self-directed active investor tracking study.
“Methodical in that they have a defined trading strategy, and thoughtful in that they study their investments closely in order to enter and exit a position at the right time.”
- By a two-to-one margin, active investors use fundamentals as their primary method of valuing a security over technical indicators (54% v. 25%), and advice from others (21%).
- When asked which resources are most helpful in researching investments, 55% chose earnings reports, followed by price charts with 37%, and P/E ratios with 36%.
- Channels and trend lines, volume, and stochastics were some of the least helpful, with 23%, 22% and 11%, respectively.
“When push comes to shove, active investors use fundamentals over technical indicators,” said George Fischer, Vice President of Trading, Margin Lending and Cash Management at E*TRADE. “That said, having more tools in your toolbox is better than having fewer — and in building a portfolio you want to use them together. It’s like the old saying ‘measure twice; cut once.’ If you study a security through both fundamental and technical lenses your chances of making the right decision will only increase.”
Several data points also suggest that experienced investors prefer not to adhere to the rigid principles advocated by technical analysts and traders:
- When purchasing a stock, only 21% have an exact idea of their target price for selling a position, with 67% having a general idea, and 13% having no idea.
- More than half – 53% prefer to monitor their position and sell when the market conditions are right, as opposed to setting limit orders (26%) or trailing stop losses (21%).
“In speaking with active investors we find that success comes from being both methodical and thoughtful,” continued Fischer. “Methodical in that they have a defined trading strategy, and thoughtful in that they study their investments closely in order to enter and exit a position at the right time.”
E*TRADE offers a variety of resources online, over the phone, or in-person to help investors remove the guesswork and make informed investing decisions. To learn more, visit Investing Insights at etrade.com to access curated content, timely insights, and actionable tools.
For useful insight from E*TRADE and third-party investment experts, follow the Company on Twitter, @ETRADE.
About E*TRADE Financial
The E*TRADE Financial family of companies provides financial services including online brokerage and related banking products and services to retail investors. Specific business segments include Trading and Investing and Balance Sheet Management. Securities products and services are offered by E*TRADE Securities LLC (Member FINRA/SIPC). Bank products and services are offered by E*TRADE Bank, a Federal savings bank, Member FDIC, or its subsidiaries and affiliates. More information is available at www.etrade.com. ETFC-G
About Research Now
Research Now, a leading digital data collection provider, powers market research insights. We enable companies to listen to and interact with the world’s consumers and business professionals through online panels, as well as mobile, digital and social media technologies. Our team operates in over 20 offices globally and is recognized as the market research industry’s leader in client satisfaction. We foster a socially responsible culture by empowering our employees to give back. To find out more or begin a conversation with us, visit www.researchnow.com.
About the Survey
This wave of survey was conducted from December 2 to December 10 of 2013 among an online U.S. sample 313 self-directed active investors who manage at least $10,000 in an online brokerage account. The survey has a margin of error of ±5.5% at the 95% confidence level. It was fielded and administered by ResearchNow. The panel is 57% male and 43% female with an even distribution across online brokerages, geographic regions and age bands.
E*TRADE Financial, E*TRADE and the E*TRADE logo are trademarks or registered trademarks of E*TRADE Financial Corporation.
© 2014 E*TRADE Financial Corporation. All rights reserved.
E*TRADE Financial Corporation and ResearchNow are separate companies that are not affiliated. E*TRADE Financial Corporation engages ResearchNow to program, field and tabulate the study.