“How do you deal with price drops in the market?” was the question 890 investors were asked in our monthly IEX Sentiment Poll. With fluctuating prices, investors face the difficult task of protecting and growing their portfolios, regardless of market conditions.
How do investors do that? In which sectors are they more cautious and which five stocks are shorted most often this month? We will check it for you.
Most opt to buy (additional) shares
The majority of investors (74.2%) see the current state of the stock market as an opportunity to expand their stock portfolio. These optimists choose to buy additional shares. A smaller, but no less strategic group (4.4%) chooses to buy put options to capitalize on future price declines.
While some cling to traditional assets such as gold and silver, the rest are exploring the possibilities of so-called Inverse ETFs that benefit from market declines. It seems that this instrument still needs to be found by a larger group of investors.
Potential for Inverse ETFs
Inverse ETFs are exchange-traded funds designed to return the inverse of an index’s daily return – leveraged or unlevered. In other words, when the index loses value, the fund gains value – and conversely, when the index rises, the fund loses.
With such a product you naturally want to be in a sector that has little growth potential in the short term. That is why we asked investors which sectors they are cautious about. The answers vary.
Which sector are you most cautious about?
- Technology: 18.8%
- Financials: 14.5%
- Energy (oil & gas): 9%
- Chemicals/Pharma: 15.9%
- Defense/Cyber: 2.2%
- Telecommunications: 12.5%
- Consumer goods: 16.1%
- Raw materials: 9.3%
- Other: 1.7%
Which stocks are shorted the most in May?
Finally, investors say which stock they would short in May. A clear top 5 emerges from all responses. It’s at number five Randstad. Investors anticipate a slowdown in economic growth. They also see that more and more companies are focusing on permanent staff, which further reduces confidence in the temporary employment sector.
It’s at number four Phillips, despite the recent huge price jump. Investors do not yet seem reassured: “The settlement does not mean that all concerns are over. Structurally it is not correct, there is a lot of uncertainty due to non-transparent management and who knows, maybe more claims will follow later.”
Third place goes to meal deliverers Just Eat Takeaway. Investors have little confidence in the business model. The competition is also reason enough for investors to short the share this month. Moreover, investors at JET are not in favor of management and see poor growth prospects.
Besi gets the silver medal. Investors believe that the share has risen too quickly, is valued too high and is therefore too expensive. Investors will also have doubts about Besi’s order inflow in the coming quarter, which was disappointing last quarter.
And then by far the number 1: Adyen. Investors consider Adyen to be the most overvalued share in Damrak. “The price trend is incomprehensible based on the figures. Sentiment is already turning slightly, which is also due to the increased margin pressure. This share is very expensive and has no choice but to fall in the coming month.”
Tags: fellow investors confidence stocks
