A majority of retail investors (69%) are feeling confident about their investment portfolio despite the prolonged bear market that troubled financial markets in 2022. This comes as more investors feel more relaxed about the perceived threat of inflation.

Also, most retail investors (67%) feel positive or have mixed feelings about the downturn recorded last year. The remainder (33%) report that their eagerness to invest has been impacted to some extent.

These are some of the findings of the latest Retail Investor Beat report released on Wednesday by the social trading platform eToro.

The firm said the fourth quarter 2022 edition of the report is based on a survey of 10,000 retail investors drawn from 13 countries and three continents, which was conducted between 14-24 December 2022.

The study, which was conducted in partnership with research company Appinio, selected respondents from the US, the UK, Germany, Australia, France, Spain and Italy. In addition, it drew respondents from Denmark, the Netherlands, Poland, Norway, the Czech Republic and Norway, eToro said.

Watch the recent FMLS22 session on trading in an era of social media.

Are Young Retail Investors More Risk Tolerant?

According to the report, a majority of young retail investors appear to be more risk tolerant as 76% of them between the ages of 18-34 report feeling positive or indifferent about the 2022 downtrend. On the contrary, only 60% of older investors above 55 years old feel this way.

“2022 will have been the first major bear market for many less experienced retail investors, yet the data shows that it is older investors with shorter retirement time horizons who are feeling the strain the most,” eToro explained.

However, the report notes that since about a quarter (22%) of the investors see a global recession as the biggest risk to their investment, many are adjusting their portfolios to include more defensive assets like healthcare and utilities. As a result, cash allocation has climbed by 50%, eToro said.

“In preparation for this recession risk, many are adjusting their portfolios defensively whilst also preparing for future opportunities. The proportion holding cash assets (e.g. savings account) jumped from 46% in Q3 to 69% at the end of Q4 – a 50% increase,” eToro said.

In its quarterly report published in July last year, eToro found that while 64% of retail investors held on to their investments, about 28% bought the dip during the stock market sell off.