Is there a new breed of self-reliant investors?

January 12, 2010

TDJames Daly is TD Waterhouse Investor Centre Representative regarding investor confidence.  The opinions expressed are his own.-

Will the new decade herald the emergence of a new breed of self-reliant individual investors?

Some seem to think so according to TD Waterhouse’s annual Investor Confidence Survey of over 1,000 individual investors across the UK, with over half (53 percent) of respondents stating that they now rely more on their own decisions when making investment choices compared to just under a fifth (19 percent) who said they look more to professional advisers and brokers than they did last year.

This disparity reflects an increasing trend of self-reliance, which may suggest that retail investors have become a more sophisticated bunch as they adapt to today’s unpredictable financial markets.

The research goes on to show that 64 percent of respondents state the internet as their most popular source of information followed by the financial press (58 percent).  Overall, the number of UK investors looking to professionals for advice on their trading activities has fallen slightly to a third (33 percent) while those seeking “do-it-yourself” tools from execution-only brokers has risen from 5 percent in 2008 to 20 percent in 2009.

In fact, the survey shows when it comes to investment services more UK investors (32 percent) are actively trading through execution-only brokers now compared to a year ago, while just 26 percent prefer to trade through an advisory broker.

It has been a rocky 15 months and we have seen many financial institutions falter and crumble under the pressure of liquidity constraints. If the news media is anything to go by, this has given rise to a general distrust in the transparency and accuracy of company statements and information from authority figures. While continually low interest rates have made it difficult for investors to gain returns from traditional investment options or cash on deposit.

Is it this kind of sentiment that has driven so many retail investors to go solo in their trading efforts or is it simply good sense to diversify your sources of information amid increased market volatility?

When it comes to executing trades, the survey reveals online trading is the method of choice for 60 percent of UK investors. TD Waterhouse has also seen a surge of online trading during the course of the last year, with August being a record month of online equity trades.

Volatility in the financial markets has certainly played its part. When looking at actual trading trends in more detail, a review of the most traded shares by TD Waterhouse customers shows that the trend was more towards buying than selling, with buys 17 percent of the sells in 2009.

Most customer activity focussed on Lloyds Banking Group, Royal Bank of Scotland (RBS) and Barclays, with all three stocks accounting for 66 percent of the overall top ten trades during the year.

With the volatility of banking stock there will be winners and losers, but the key questions for 2010 remain whether market volatility in general (and the temptation of making short-term gains despite the risks associated with stock market investment) has lured new “opportunist” traders who may not have considered trading before?

Or has the financial and economic crisis simply given birth to a new breed of lone traders who would much rather make their own decisions than rely on the advice of others?


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“Financial & Wealth Advisors” have been shown to be charlatans.
They have lost people a lot of money through their ineptitude & refuse to accept any resposibility for their advice and actions.
People have realised that it’s cheaper not to lose money than to try to make it by speculation in current markets, and if they are inclined to accept risks they’d rather back their own judgement than take (and pay for) the advice of fools.
If you’d like chapter and verse mail me.

Posted by john upex | Report as abusive

Combination of low interest,volatility in the market and sound returns from large well managed companies.

Posted by fran | Report as abusive

When you consider that for some time the cpi, and essentially BOE interest rates do not represent the real cost of living, the latter being significantly higher than the cpi – savers have been and continue to be hammered. Many banks have shown themselves not to be above board both in their corporate and individual dealings so is it no surprise those who have money do not trust banks in general? There are risks in all forms of investment, and this now includes ordinary savings accounts too

Posted by David baker | Report as abusive

The lemon sellers in wall street will have more opportunities with so many new self-investing public, till they learn what it is all about.

Posted by Ram | Report as abusive

Foolish. Yes. I joined the Fools more than a decade ago and this University of the Air taught me the basics and more. I retain contacts with “reputable” analysts and it’s interesting to see how, ten years later, they begin to offer Foolish snippets, evidently news to them.
I completely underestimated the downturn in 2008-2009, but was ready for any upturn. As a Foolish result, yet playing safe, my portfolios are now very comfortably ahead of their previous highs. QE has helped me.

Posted by Malcontent | Report as abusive

I have made my own decisions since the days of Brit oil my first stock buy. True I have made mistakes along the way not least switching from LLoyds to RBS last year. Over all I have done well and can only blame myself if things go wrong.

Posted by John Robinson | Report as abusive

[…] Is there a new breed of self-reliant investors? – I think not: Seems to me a case of selection bias. All the "bandwagon" investors have been scared off by volatility […]

Posted by Simran Gill » Blog Archive » Bookmarks for December 24th through January 15th | Report as abusive