00:00So let's talk, of course, about tech, because that is the position, right, that folks are really excited and bulled up when it comes to the tech sector.
00:07This is the fourth quarter survey that you have out. But how long has tech basically been in the limelight here?
00:14Pretty much the whole time, Katie. And so this is the second consecutive survey where we've seen bullishness at record levels of 50 percent, 7 percent of our clients, of traders, actually bullish.
00:24But tech's remained at the top for a while. But it's a little bit of a nuanced story, to be honest.
00:29They're bullish, but they're cautious. Right. And so there is a sense roughly two thirds of those surveyed said that they think the market's a bit overvalued.
00:37And so what we are seeing in tech is long. A lot of the names you would think of in your mag seven, in your A.I. trades, but cautiously long.
00:44So hedging some of those positions with options as examples and maybe taking some off when we see big pops in stocks and then returning to those positions a little bit when we see dips.
00:55That's really interesting. I mean, there is the notion out there that when the music is playing, you have to dance.
01:00And hearing you talk, it sounds like that's sort of the mindset that you're describing of some of the folks that you surveyed.
01:05Yeah, I think they want to be participating. Right. They see overall a longer term bullishness.
01:11But maybe in some cases they're using options as a stock replacement strategy. Right.
01:15Because if in fact the market is a bit overvalued, I'm actually taking risk off the table with an options position as opposed to an equity one.
01:23And then to your point, which I thought was a really good one remain around sort of utilities and energy sort of driving tech in the A.I. trade.
01:29We are seeing a little bit more, especially in crypto, of clients looking at sort of some of the less household names in the pure play crypto space.
01:38Maybe something like an iron as opposed to a micro strategy where they're looking a little bit away from their straight crypto play and into more of the mining or the data center or the energy providing space, which is interesting, too.
01:50Yeah. And it's kind of interesting, too, at that NVIDIA event, they announced sort of a slew of agreements with a wide variety of companies from Lilly to Nokia, et cetera, et cetera.
01:57So you get a sense here that that trade is broadening out a little bit, at least opportunities there.
02:02I am curious, though, outside of tech specifically, are you seeing any bullishness in any other sectors?
02:08Yeah. So we saw a little bit of bullishness in health care, I think partially because it was just beaten up for so long.
02:13And that gets back to the retail investor and retail trader being a little bit more conscious of opportunities as stocks have been beaten down.
02:21We also saw a pretty crowded trade in metals last quarter.
02:24Interestingly enough, as as they've started to get beaten up a little bit over the course of the last few days, we've seen our clients, including younger clients, which I thought was interesting, younger clients getting more into metals.
02:34You don't typically sort of think of that.
02:37But our clients have been actually net sellers four out of the last six days in the metal space, getting maybe a little bit ahead of some of the selling that's gone.
02:44But I think it's also consistent with the idea of I'm bullish, but I'm a little bit cautious.
02:49So maybe I'm allocating some of my powder towards metals, which I think may be a little bit less volatile.
02:54In terms of the risk, though, I mean, what do they see as the big risk?
02:58Is it, I don't know, geopolitics?
03:00Is it the Fed?
03:01What?
03:02Yeah.
03:03Stagflation is definitely one as they look at sort of the labor market and some of the risks.
03:07So it does some of these tie together as well, just like you had said before.
03:10But stagflation is high there.
03:12Government policy, and I think that's reflected in both the shutdown, you know, we're at day 28, but we haven't really seen much of an impact.
03:21But I think at some point people think there's got to be some impact at some point, right?
03:25And then I think still some of the government concern rests around some of the concern about tariffs and still some of the volatility like we saw where, you know, it was kind of quiet for a while.
03:34And then on the 10th of October, we had a little bit of noise, and that feeds into some of the pockets of volatility that we've seen.
03:41Right.
03:41That's really interesting because, I mean, just keeping up with the headlines is pretty exhausting.
03:47So it sort of feeds into the backdrop that you're describing that, okay, people want to participate, but they're a little bit cautious.
03:53And, I mean, as we go forward here, I'm just curious about, you know, these results that you just got for this survey.
03:58I mean, how does that compare to where we started the year, for example?
04:02Because the tariff picture, for example, has changed dramatically since then.
04:05Absolutely.
04:06So the two major things that I've seen different, we've been bullish for a while, but, again, we're at the most bullish levels that we've been.
04:13That notion of overvalued has gone up a lot.
04:16So it's gone up 10 percentage points since the last survey from about 57% to 67%.
04:21So I think people are definitely fearing a little bit of the overvaluation.
04:26The other thing that jumped out to me was confidence level.
04:29We heard 70% of those surveyed are confident in their ability to make good investment decisions.
04:35We think that seems a little bit incongruent if you're cautiously bullish, but I think it's a factor of people leaning into education.
04:42We lean into a lot of education at Schwab relative to the derivatives markets and, you know, broad basics of stock trading and things like that.
04:50And so as they consume more education, they feel more competent.
04:53They feel a bit more confident in what they're trading.
04:57And seeing that number at 70% was new to me.
05:00That's an all-time high as well.
05:02When you look at the data, do you get a sense that the buyers are making very individual idiosyncratic decisions about the stocks to buy?
05:11Or is this more of a just, you know, shoot your shot at the sector that's hot right now and go along for the ride?
05:17I think we see good concentration in the ETFs, right?
05:19So if you're believing in the sector, you want to be in the ETFs.
05:22So we absolutely see that.
05:24We see a concentration in names for sure.
05:27One of the things we see, though, that's really interesting is sort of the contrarian perspective that some of our clients take.
05:32I mentioned October 10th and October 13th.
05:35You know, October 10th is one of the biggest down days we've seen in a while.
05:37That was our biggest net buy day for our clients in a really long time.
05:42And then we actually saw the converse on the 13th, where we saw a pretty big net selling day.
05:48So I think it is a combination of they want to be in the sectors.
05:51They also want to be in specific names, but not when they see those names as overvalued,
05:55where they're either getting out of those positions to maybe get back in at a little bit lower or at a minimum hedging some of those positions.
06:00And we should just point out, those were back-to-back sessions, the Fridays.
06:03That was the Friday to Monday.
06:04The 3% drop and then the 1%, 2%.
06:06So that is, those are some engaged clients that you have on the platform.
06:09Quickly, before we let you go, you know, when you mentioned that you're seeing more folks basically use options to hedge.
06:15So are they using actual contracts or are they going into, for example, some of these options-based ETFs, which basically promise to do it for you?
06:24Yeah, it's a lot of straight options trading for us.
06:26And so we're up roughly 40% September over September year over year in terms of contract volumes.
06:32We're also seeing more of our new traders and our experienced traders get into the more complex option trades.
06:39And so what that tells me is it's sort of less of some of the just risk-on leveraged strategies and it's more risk management strategies that we're starting to see.
06:48But it's definitely a lot of pure options trading, Katie.
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