Investors are gripped with fear and distrust but still hold onto their favorite stocks

Investor sentiment and expectations have plummeted to their lowest level in years due to a stock-market correction and mixed messages from the White House on the future economic policy.

According to our recent survey of individual investors, 61% of respondents are either “worried” or “somewhat worried” about recent market events, with over 40% expecting another significant drop of 10% or more for the S&P 500 in the next three months. One third of respondents are responding by investing less money in the stock market, and 26% are investing in money market funds. 

Despite the real fear, our readers still own their favorite stocks. These include popular names such as Nvidia (NVDA), Apple(AAPL), Amazon(AMZN), Microsoft (MSFT), and many others. Retail investors have invested close to $70 billion in U.S. stocks and exchange-traded fund so far this year. This is according to VandaTrack’s data, cited by Financial Times. That’s way above their monthly average, even as the S&P 500 fell into a correction, and some of the largest stocks lost trillions of dollars in value.

Tariff Uncertainty & Recession Fears Top Worries

Nearly three-quarters (75%) of respondents said that tariffs and reciprocal trade barriers against the U.S. were their biggest concern. Investors are concerned about the White House’s lackluster economic and foreign policies. They also worry about a potential slump, inflation, U.S. relationships with China, and weakened corporate profits. The Federal Reserve, the Treasury secretary, and even President Obama have all suggested that the impact of tariffs would be transient. This would create a temporary price adjustment. However, investors fear the worst. Three-quarters believe that there is at least 50/50 chance for a recession to occur in the next twelve months. 

Stock Market plunges due to lack of trust in government

Investors’ trust in current administration is at the core of their concerns about the safety and security of their investments. Half of respondents think that policies proposed and implemented by the Trump Administration will hurt their investments in the next 4 years, while only 25% believe it will be beneficial. Nearly half (48%) say that they trust the stock markets less under the current government, while only 37% expect the market to return 5% or more over the next 4 years. This is a 20-point drop from the results of our February survey.

Where are investors afraid to retreat?

Money market funds were the most popular choice for investors looking for safety or diversification during the recent selloff.

One-third of respondents believe that U.S. stock is the asset with the greatest potential over the next four year period. This is followed by stocks outside of the U.S. as well as gold, private equity and cryptocurrencies. 

What Would you do with an extra $10,000?

Individual stocks and ETFs are still the top choices for our readers with an extra $10,000. Both have lost their appeal since February. Money market funds and CDs, however, have grown in popularity due to the high yields. 

Some readers also listed paying down debt as the top thing they would do with an additional $10,000. This may be a sign that households and individuals are feeling the strain of rising living costs. 

Investopedia Readers Favorite Stocks

Individual investors are fairly consistent with the equity holdings in their portfolios. Nvidia is the most popular stock among respondents. Over 40% of them still own the chipmaker’s shares, which have fallen nearly 20% since their recent all-time high. Apple, Microsoft and Alphabet (GOOGL) round out the top five. This has been fairly consistent for many years. Tesla (TSLA), whose stock has fallen 40% from its recent highs, no longer ranks among the top ten. 

Nvidia or Die!

Nvidia was not only our readers’ top choice, but also the stock that they would buy and keep for the next decade. Warren Buffett’s Berkshire Hathaway (BRK.A, BRK.B), is their second choice, proving that diversification and value investing are still alive and well today. It’s the stock that readers would buy and hold for a long time.