Wait it out or buy the dip?

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Investor sentiment remains near multi-year lows following the worst first half of a year for markets in fifty years, but recent rallies may be easing their anxiety.

According to Investopedia’s monthly investor sentiment survey, 55% of respondents say they are at least somewhat “worried” about recent market events, that’s down slightly from our last survey in June. 

Inflation topped their list of worries, followed by a potential recession, geopolitical uncertainty, and rising interest rates. Those have all been the dominant themes surrounding the direction of the global economy and capital markets this year. At the bottom of their list are the spread of new COVID-19 variants and deflation.

Waiting for Signs of Smoother Sailing

More than 40% of the respondents still think markets will trade lower over the next three to six months. Meanwhile, 37% think the stock market will trade higher, with 5% of them predicting returns of 10% or more. The near-even split of the respondents and their market predictions speaks to the general uncertainty across capital markets.

Most are patiently waiting for more signs of smooth sailing, as a majority or 68% say they’re inclined to wait it out. Slightly over half or 56% of our readers say they are “buying the dip,” and 23% say they are selling stocks and taking profits. Only 12% reported selling stocks at a loss.