Evolving through Volatility: Read the 2022 Retail Investor Report
The end of the market bull run is a story of progression, not panic, for many retail investors. Here’s how modern portfolio-builders are navigating volatility.
In 2022, retail investors experienced a geopolitical crisis, record inflation, and volatile markets full of uncertainty — quite a different experience from the previous decade, where investors saw the longest market bull run in U.S. history.
We surveyed Public.com retail investors to explore how they are adapting to the changing environment. In general, this story has been one of progression, not panic, as investors leveled up to navigate the new normal.
Risk re-evaluation, more diversification
More than a third of retail investors are reconsidering risk following S&P 500 index declines of nearly 20% during the first half of 2022. Forty-six percent said their risk tolerance has not changed, and 19% report having an increased appetite for risk.
As risk tolerance goes down, an appetite for diversification has gone up. Nearly half of investors reported diversification as their primary strategy for the next 6 months.
And while diversification might not be the primary strategy for shorter-term investors, 36% of them say they are shifting their strategies to reduce risk.
Volatility boosts confidence for some
Despite the down cycle, many retail investors report greater confidence in their own skills than they had 6 months ago. This trend was more pronounced among the youngest investors surveyed (18–24), who seem to have embraced the volatility as an opportunity to improve their sophistication.
There’s trusting oneself — and then there’s trusting the markets. In our study, 64% of investors said they have the same level, if not greater, trust in the stock market as they did 6 months ago. In contrast, 41% of investors reported less trust in the crypto markets, but those with long-term outlooks or defined growth strategies reported greater trust today vs. 6 months ago.
Investing with context
Volatility is underscoring the value of business health metrics, with 52% of investors saying that they are now paying more attention to fundamentals. The youngest investors surveyed (18–24) were most likely to say they evaluate fundamentals to a greater degree than they did 6 months ago.
Which areas are retail investors digging into? Half of the investors surveyed reported an interest in clean energy, EV, or emerging tech sectors. IPOs and SPACs had the lowest level of retail investor interest following market volatility in the first half of 2022.
The evolving role of investor relations
Retail investors are getting information from a variety of channels, including financial news media, company IR resources, and social media — but the primary source cited was their investing platform.
Moreover, retail investors have different expectations from the companies they invest in. A vast majority (89%) of investors factor transparent and authentic leadership into their investment decisions, underscoring the need for companies to tailor investor relations to meet the needs of retail shareholders.
Public.com launched Pulse in April 2022 to provide companies with new ways to engage with and understand their retail investors.
Bottom line
Volatility’s tough lessons come with opportunities to evolve and expand investing acumen. Resilient retail investors are taking 2022 in stride — turning market-wide declines into personal growth.
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Methodology: This research was fielded by Public.com in July and August 2022. The research sample was collected over a one-week period, totaling more than 2,000 completed responses among active retail investors on the Public.com platform.
*Open To The Public is a member of FINRA and SIPC. This content is not investment advice. Investing involves the risk of loss.
