TD Direct Investing Index

Welcome to the TD Direct Investing Index
The TD Direct Investing Index (DII) provides data and insights relating to the historical self-directed investor activity. By looking at this historical activity, it can help us see how investors reacted to economic and financial market events.

For more information about the DII, read our FAQs. For insights into July’s self-directed investor behavior, read on.

July 2021: The optimism/pessimism tug-of-war results in neutral sentiment
Within the range of +100 to -100, July’s +2 DII sentiment score is firmly in neutral territory. Meanwhile, the S&P/TSX Composite Index showed a gain of +0.6%. But don’t let these apparently tranquil numbers fool you: two opposing forces -- increasing vaccination rate and rising concern of the delta variant -- were likely driving a lot of activity.

Let's start with the overall TD Direct Investing Index (DII) dropping 52 points from June’s score to get us to July’s neutral +2. (And yes: a 52-point drop is kinda a big thing).

Why the drop? The sentiment was pulled down by sector heavyweights Materials and Energy. Self-directed investor may have had concerns that the global economy has peaked. They sold more economically sensitive stocks, such as copper producer HudBay Minerals and lumber-related Western Forest Products (lumber declined 13.2% last month).

The Materials sector wasn't all down news. Gold prices rallied with lower real interest rates, a weaker U.S. dollar, and rising expectations that the Fed (the U.S. central bank) will maintain support for the U.S. economy. B2Gold, Kinross and Barrick were top buys.

Over to energy. Oil markets were volatile last month and a good illustration of July's tug-of-war. Uncertainty surrounding OPEC’s (Organization of the Petroleum Exporting Countries) planned production increase and concerns over the rising delta variant impacted global demand. Oil prices still climbed last month (+0.7%), although at an anemic pace. Self-directed investors took advantage and bought some of the Energy stocks as they dropped from the yearly high. Suncor and Enbridge saw the heaviest buying.

Another behemoth of a sector, Technology, was the top performer in July, led by semiconductors with NVIDIA and Micron among the most purchased in the sector by investors. Conversely, Apple, although up 6.5% last month and supported by a strong Q2 earnings release, was the top sold within the DII technology sector. Other top sells were Nokia and AMD.

Despite the building pessimism, Canadians seemed optimistic about the re-opening, as evident by the continued popularity of the movie theatre chain, AMC, and Canada's biggest airline, Air Canada.

Safety, risk, and there’s no place like home
Age groups, regions, and trading styles were really in their feelings in July.

Let's start with trading styles. Active traders (investors who made more than 29 trades the previous quarter) continued to display positive sentiment of +8, despite a significant drop from 38 of last month. Long-term investors (investors who trade less than 29 times per quarter) showed negative sentiment of -6, down from 17 in June. Both investor groups flocked into what might be considered re-opening stocks (e.g. AMC and Air Canada).

Moving to age groups, Boomer sentiment saw the sharpest monthly drop, from 19 last month to -12 in July, and contributed the most to the negative sentiment of the month. These investors still bought (and held) energy stocks, such as Suncor and Enbridge. Younger investors (Gen X, Y and Z) continued to appear to have more appetite in re-opening stocks such as AMC and Air Canada whereas older investors (Boomers and Traditionalists) sold securities with some uncertainty, such as Brookfield Property Partners and Inter Pipeline.

When we slice self-directed investor sentiment by region, investors from Ontario and British Colombia showed negative sentiments, which were balanced by investors from Quebec, the prairies and Territories, which showed positive sentiment. Again, we saw investors across different provinces betting on re-opening stocks such as AMC, Air Canada, Suncor, Cineplex and Carnival. We also observed home preference, in which investors in Alberta, Saskatchewan, Manitoba, and the Territories showed positive sentiment in energy stocks like Suncor.

While not quite a mullet sentiment (business in the front; party in the back), the tug-of-war between optimism and pessimism does illustrate mixed feelings. Self-directed investors were willing to invest in securities (rather than staying on the side-lines in cash or fixed income) but the securities they chose typically tended to be less volatile – securities and sectors that may resonate with them geographically. The exception, of course, are those re-opening bets. Maybe it is a mullet market after all.

The TD Direct Investing Index (DII) provides data and insights relating to the historical self-directed investor activity. By looking at this historical activity, it can help us see how investors reacted to economic and financial market events. For more information about the DII, read our FAQs. For insights into August’s self-directed investor (SDI refers to investor) behaviour, read on.

August 2021: Watching the Grass Grow
August is rarely known for market shenanigans and this year's August DII sentiment is slow and subtle, like watching grass growing: a slightly optimistic +9, which is up 7 points from July's +2. Remember, this is in a range of +100 (for bull) and -100 (for bear) and continues the subtle bounce-back from that massive 52-point drop between June and July. While only a slight increase, it was reflective of the overall market move (+1.5% return for the S&P/TSX Composite Index over the same period). This is where the markets grew way faster than grass: North American equities continued to set new all-time highs, possibly pushing concerns over the Delta variant to the backburner. The improvement in sentiment was driven by strong earnings and positive news coming from Financials, Healthcare, and Communications.

The wind beneath the sails

Financials (+11) were upbeat, mainly due to the anticipation and delivery of better-than-expected reported earnings from the big Canadian banks. The most popular securities included BNS (Bank of Nova Scotia) and GSY (GoEasy). We also saw a rotation out of U.S. banks and into Canadian banks, which may have been triggered by the higher dividend yields in Canadian banks. Given the propensity for many older investors and long-term investors to desire higher dividend stocks, this rotation may have been reflected in a notable improvement in Boomer sentiment as well as long-term investor sentiment. The most sold securities included BAC (Bank of America), WFC (Wells Fargo), and C (Citigroup).

Healthcare (+6) was buoyed by a combination of cannabis and COVID-19 vaccination potential. In the cannabis space, HEXO (Hexo Corp.) and WEED (Canopy Growth) were popular stocks. Given that these two cannabis companies were down significantly in August, this could be an example of investors buying on the dip. With respect to traditional pharmaceuticals, PFE (Pfizer) was in demand coinciding with the expected need for vaccine booster shots to be rolled out in the U.S. We saw this played out in the activity of Gen Z and Millennial investors, who favored Healthcare stocks, and within the Active Trader group.

The final sector that exhibited positive sentiment in August was Communication, up +5 from July. All age groups contributed to this higher sentiment, with Boomers as the main drivers of the increase in sentiment. When we look at the most bought securities in Communications, the meme stock, AMC, was the most purchased among Gen X, Gen Y and Millennials. The fact that they bought heavily at 52-week highs, one of the DII proxies, caused a move up in sentiment.

Un-slumping yourself is not easily done

Materials (-17) weighed heavily on August's overall sentiment. Materials stocks were down, most notably lithium producer, LAC (Lithium Americas Corp); steel producer, X (United States Steel Corporation); and mining company, TECK.B (Evolve FANGMA Index ETF CAD Unhedged), which all saw a net sell in August. In fact, LAC was among the most sold stocks in the Active Trader group and dragged down the sentiment of that group. Geographically, Ontario was particularly affected by the pessimism in Materials, and was weighted down by stocks such as LAC, NOT (Noront Resources Ltd) and X. One sweet note amid the sour: ABX (Barrick Gold) was in the most bought category. With less fear in the market that the Federal Reserve will cause a repeat of the taper tantrum (which occurred post-Global Financial Crisis), the reduced threat of rising interest or inflationrates appeared to have been good for gold in August.

Although not as negative as Materials, Consumer Staples (-2) came in second only to Materials in August sentiment. The sector was mostly weighed down by food producers such as MFI (Maple Leaf Foods Inc) and TSN (Tyson Foods, Inc), and chained grocery stores such as WMT (Walmart), MRU (Metro) and L (Lowes), which may be related to people starting to get more comfortable dining out instead of eating at home. This also resonated with the lower sentiment in Ontario, which may be a result of the province being under tighter outdoor restrictions compared to other provinces.

Know when to fold them

Technology fell into the most sold category in August, despite being up +3.4% in the markets. This may reflect some profit-taking amongst some investors. Many stocks such as SHOP (Shopify), MSFT (Microsoft), and NVA (Nuvista Energy) were quite positive last month, as we saw a rotation back to growth stocks and away from cyclical value such as materials. Credit card stocks V (Visa) and MA (MasterCard) were also among the top net buys even with the price declining 7.0% and 10.3%, respectively last month.

…Or not

In an interesting twist, SU (Suncor), was on the most purchased list as well. Oil was volatile on the month given the negative growth news coming out of China and the risk that the Delta variant may slow growth. But with oil prices snapping back in the latter part of the month, investors seemed ready to jump in and ride the wave, possibly hoping that global growth fears would dissipate.

The August Doldrums

Meh. August was flatish and neutralish and, with a few exceptions, about as exciting as watching grass grow. Investors appeared to be cautious and the markets were waiting: what impact will the Delta variant have on future economic growth, particularly overseas? Current economic data has been slowing while overall corporate earnings have been better than expectations, but is that a trend? It appears that some investors, especially Boomers, were reluctant to take too much risk. Ontario was a drag with its low sentiment. Then again, market thrill-rides aren't to everyone's taste. So if you do want some drama, we recommend you read a book.

September 2021: Sentiment Jumps While Markets Slump

The end of summer brought volatility in markets, but that didn’t stop DIY investors. With the S&P/TSX Composite and the S&P 500 down 2.5% and 4.8% respectively, we would have expected sentiment to follow. Au contraire. The September DII sentiment rose to +37, up from +9 in August. Remember, the sentiment score is on a range from -100 (most bearish) to +100 (most bullish). Investor confidence in September was the tale of two sectors: energy having the best of times and materials with the worst.

September was fueled by headline events

The overall score for Energy rose to a high of +53 (from negative territory last month). Given all the action in the sector, it's no surprise that energy prices and sentiment rose. In addition to the active hurricane season (such as hurricane Ida in the U.S.), there were supply bottlenecks (most of Europe) and rising demand by consumers. Growing pressure from climate-conscious investors and governments for oil majors to green their business had appeared to lead to drillers’ hesitancy and a lack of CapEx (capital expenditure) in fossil fuel production. It was a classic case of market demand outpacing supply, which in turn appeared to help drive higher stock prices and investors getting in the action.

Canadian companies Tourmaline (TOU), Enbridge (ENB), and Suncor (SU) were the drivers of Energy sentiment overall. When we look at the sector from the perspective of age demographics, it was Boomers who jumped on the Energy train. This investor group had the highest allocation to Energy stocks relative to the other age cohorts. When we look at the sector from a geographic perspective, home bias is apparent. Energy sentiment was pushed higher by investors in the energy producing province of Alberta. We also saw investors in Ontario positioned in Energy, surprising given that investors in this province typically hold a lower allocation in their portfolios. Nationally, we saw both Active Traders and Long-Term investors bullish in this sector.

Materials lose their shine

The Materials sector was the main negative weight on the DII in September, dropping to a low of –25. With risks to China’s economic growth rebound flooding the newswires on the back of the Evergrande fiasco, weakness in copper and other base metals were apparent. The largest investor group to exhibit negative sentiment were Boomers (-15), who had the highest allocation to Materials of any age group. Looking at the sector from a trading style perspective, Active Traders, who jumped on the run up in base metals, showed the biggest drop. Copper producer Teck Resources (TECK.B) was among the top net sold.

The materials sector was also weighed down last month by gold and gold equities. Gold bullion posted its worst monthly value decline (-3.3%) since June and equities were even weaker (-9.8%) with Barrick Gold (ABX) and Kirkland (KL) the top sold gold stocks.

What influences the influencers?

September really was a tale of two sectors, each battling to have the most influence on investor sentiment. Energy prices rose on supply and demand factors, while Materials prices dropped on fears of a pull-back on economic growth in China. And the winner is… Energy trumped Materials, winning the title for being the biggest driver of overall sentiment.

The TD Direct Investing Index (DII) provides data and insights relating to the historical self-directed investor activity. By looking at this historical activity, it can help us see how investors reacted to economic and financial market events. For more information about the DII, read our FAQs.

October 2021: The Generational Divide: Which Side Are You On?

The historically volatile month of October ended with a surprisingly positive sentiment of +52, moderately up from last month's reading of +37. October sentiment sits firmly in bullish territory. Remember, the sentiment score is on a range from -100 (most bearish) to +100 (most bullish). Likewise, the TSX was up 3.7% in the same month. In October, we also saw an interesting trend emerge in investor confidence: the generational divide. There was strong demand for both old and new guard securities, with Boomers rocking it old school, and Gen Z and Millennials getting in their feelings with the next generation of companies.

Grey Power

Energy sentiment continued to lead confidence in all sectors for the second straight month. At +19, energy benefited from strong price appreciation in oil and natural gas markets. Energy supplies were still constrained globally and combined with the demand surge on the back of a rebound in global mobility, more pressure was placed on prices.

How did the generations respond? Traditional energy companies Suncor Energy (SU), Enbridge (ENB), and Whitecap Resources (WCP) were among the top 5 most popular stocks amongst the Boomer and Traditionalist generations. The closest they got to next gen firms was Algonquin Power & Utilities Corp. (AQN – Utilities sector), which has positioned itself in the renewable energy space. Make no mistake: all age groups pushed this sector and these securities up the ranks. The younger generations were simply more focused on high growth stock in other sectors while the Boomers and Traditionalists focused on these stable, dividend stocks. Geographically, this same trend of 'trade where you live' emerged, with energy stock demand most apparent in the energy-exposed provinces of Alberta, Manitoba, and Saskatchewan.

We Are (All) Living in a Material World

The materials sector was the next most popular sector, up 37 points to +12 sentiment, as industrial and precious metal companies saw strong investor demand. Popular names were Barrick Gold (ABX), Lithium Americas Corp (LAC), and Teck Resources (TECK.B). We would classify the improvement in sentiment as broad-based. In other words, the generations agree: this is a materials market. All investor age groups showed improved sentiment, with Boomers showing the greatest improvement. In terms of trading style, long-term Investors favoured materials, though active traders also rode the wave (to a lesser degree). The provincial breakdown was a little bit more obvious, as investors in Ontario, BC, and the Territories showed the greatest improvement in sentiment in this sector.

YouthQuake 2.0

When it comes to the companies positioned for the future, Gen-Z, Millennial, and Gen-X invested in a range of stars in different sectors such as Tesla (TSLA - Consumer Discretionary), Facebook slash Meta Platforms Inc. (FB - Communication), with a dash of Shopify (SHOP – Technology). Both Tesla, which soared to a $1 trillion valuation on the back of an expected jump in new car sales, and Meta, with negative coverage of its societal impact then its subsequent tilt to the metaverse, were getting lots of digital media ink in October. More interesting (correlation not causation) is these companies have huge social footprints, which is where younger investors comfortably spend more time than their older investor counterparts.

Elsewhere in next gen: recent top picks, like AMC Entertainment Holdings (AMC – Consumer Discretionary) and Air Canada (AC - Industrials) were holding in the top 5 but were sliding in popularity. Active Traders and those in Quebec, Ontario, and BC were also big into next generation stocks.

The Big Reveal

So. Were older generations more conservative with a focus on wealth preservation and younger generations ready to take risks on innovation? Yup. October's numbers seem to say as much. What was perhaps more interesting were the layers on top of that - some of the factors which may have driven investor decisions, from familiarity (buy what you know) to home bias (buy where you live). And dare we say - to hopes and dreams (buy the world you wish for).

The TD Direct Investing Index (DII) provides data and insights relating to the historical self-directed investor activity. By looking at this historical activity, it can help us see how investors reacted to economic and financial market events. For more information about the DII, read our FAQs.

For the first time since we began the TD Direct Investing Index, Atlantic Canada topped the charts with the highest positive sentiment in Canada.

Let's set the stage. Remember the market earthquake between February and March of 2020 when the impact of Covid-19 finally sunk in? Well, in November 2021, news of the Omicron variant may have caused yet another after-shock. Though equity prices were rising fast for most of November, the negative news headlines at the end of the month led in part to equity markets to pare back gains. This left the DII sentiment index down 31 points from October, to November's bullish sentiment of +21. Remember that the DII sentiment score ranges from +100 for most bullish to -100 for most bearish. The TSX was up 0.8% over the same period.

So that's the background. Now, here's the big story. This change in sentiment wasn't shared equally across Canada. When we look at sentiment based on geographic location, a significant divide emerged.

East coast showed us some love

Let's start with the most optimistic region. That honour went to Atlantic Canada. Investor sentiment doubled to a level of +7 points, powered by positive sentiment in every single equity sector. That's right. Every. Single. Sector. Experiencing the most positive sentiment was Information Technology (IT). In fact, demand for stocks in the IT sector was over four times the level of the next most favoured sector in Atlantic Canada (Materials). We see HIVE (Hive Blockchain Technologies out of B.C.), NVDA (Nvidia Corporation), and PYPL (Paypal Holdings, Inc.) were the top bought IT stocks. Given PYPL and NVDA are high beta stocks (beta measures price swings relative to the market) and with the market swings towards the end of the month, those stocks were even more volatile than normal.

Smack dab in the middle Quebec and the Prairies

Investors in Quebec and Prairies were smack dab in the middle on the sentiment (the joy of trading) scale, with scores of +5 points each. We saw Investors in all four provinces embracing IT, though to a much lesser degree than Atlantic Canada. Quebec leaned to many of the same IT securities as Atlantic Canada, with NVDA (Nvidia Corporation), PYPL (Paypal Holdings, Inc.), and the fiery AAPL (Apple) getting a hot minute. In the Prairies, NVDA and PYPL were the top 2 bought, and SHOP (Shopify), and AAPL were the top 2 sold.

Cranky Ontario and BC

The biggest change from last month came from the sentiment of investors in Ontario and BC. Ontario sentiment dropped 21 points, from +24 to +3, while B.C. went below 0, dropping from +9 to -1. Investors in Ontario favoured IT -- NVDA, PYPL, AAPL -- and consumer stocks -- TSLA (Tesla, Inc.), COST (CostCo Wholesale Corporation), and WMT (Walmart, Inc.). They also soured on Financials -- MFC (Manulife Financial Corporation), and BNS (Bank of Nova Scotia) -- and Industrials -- AC (Air Canada) and PLUG (Plug Power, Inc). Comparatively, in BC, investors sold Consumer Discretionary stocks TSLA, AMZN (Amazon), NIO (Nio, Inc.), Financials stocks MFC (Manulife Financial Corporation) and RY (Royal Bank of Canada). Others to drop in sentiment were Energy stocks SU (Sunlife) and CVE (Cenovus Energy Inc.) and, most notably, Materials stocks TECK.B (Evolve FANGMA Index ETF) and ABX (Barrick Gold).

How're you feelin’? What about your folks?

There are all sorts of ways to slice sentiment: age range, trading style, sector, or region. Use the filters in the charts below to find your people and your family to see how they felt in November. Now we will modestly quote our own paper, Understanding Investor Behaviour:

"The actual investment decisions of individuals may be the most honest representation of investor feelings and beliefs. By looking at self-directed investor trading activity, we can see how people react to economic and financial market events…"

In short, Atlantic Canada felt just fine in November. They liked what was going on and showed it with their trades. It'll be interesting to see if they stay positive.

The TD Direct Investing Index (DII) provides data and insights relating to the historical self-directed investor activity. By looking at this historical activity, it can help us see how investors reacted to economic and financial market events. For more information about the DII, read our FAQs.

Even with Omicron risks flooding the news headlines in December, the DII brushed aside negativity, remaining in positive territory at +20. This continues a streak of nine straight months of positive investor sentiment. At the same time, the S&P/TSX Composite Index climbed a healthy 2.7% on the month. Remember that the DII sentiment score ranges from +100 for most bullish to -100 for most bearish.

Money, money, money

Our top sector in December was Financials. Canadian banks posted their year-end results at the tail end of the year. And this was a case of 'surprised to the upside' with the big ones, such as Scotiabank (BNS), Manulife (MFC), and Royal Bank of Canada (RY), posting stronger than expected results.

There are a few ways to slice this insight. Demographically, Traditionalists and Boomers led the move. These two groups tend to be more heavily exposed to Financials compared to younger investors, partly due to the sector’s typically higher yields and strong dividend growth. Geographically, home bias played a significant role, as investors in Ontario led the move to the Financial sector. This follows past DII geographic observations, which revealed that there may exist a strong home bias that causes Ontarians to be significantly overweight in bank stocks given most bank head offices are located in Ontario.

Shop till you drop
Gifts weren’t the only thing being bought this holiday season. Feeling confident in the IT and Consumer Discretionary sectors, investors favored companies that were poised to benefit from increased consumer spending. Stocks like NVIDIA Corporation (NVDA), Apple Inc (AAPL), and Shopify (SHOP) were top IT stocks, while the highly traded and more volatile Tesla (TSLA), GameStop Corp. (GME), and Alibaba Group Holding LTD (BABA) were top discretionary buys. These stocks were popular amongst Active Traders, more specifically Gen Z, who jumped on recent trends. Spreading holiday cheer were investors in Ontario and BC, who contributed most to the positive sentiment in these sectors.

The weakest link
While some sectors were on a high, others didn’t fare as well. Materials stocks were the least favoured in December. This was apparent mostly with the Boomer generation and investors that live in BC. The negativity was also apparent with Active Traders who are generally quick with the sell trigger whenever bad news hits, such as, the BC floods, which may have had an outsized influence over the Materials sector this month. Gold stocks such as Barrick (ABX) and Kinross (K) were among the top bought as investors added to their gold positioning on rising covid risks.

Houston, we have a problem
The Energy sector lost some steam in December as investors exhibited negative sentiment. With Omicron denting travel plans, the expected drop in global mobility seemed to negatively influence energy demand. This is significant since over two thirds of all energy demand comes from global mobility. Air travel, driving, and shipping are big energy users and stall with lockdowns. Enbridge (ENB) and Suncor Energy (SU) were the most impacted stocks.

Finishing 2021 on a fundamentally high note
Our year-end felt like a textbook case of macro-economic fundamentals. Big picture topics and events played a clear role in what investors did and how they felt. Outperforming year-end earnings results for banks led to positive sentiment for Financials. With holiday shopping sprees on their side, the IT and Consumer Discretionary sectors didn’t fare too badly either – however, the Omicron variant and other current events put a sour note in the Materials and Energy sectors.

Despite a year packed with macro-economic events, Canadian retail investors closed out 2021 feeling positive. Yay us! And a happy (belated) new year.

The TD Direct Investing Index (DII) provides data and insights relating to the historical self-directed investor activity. By looking at this historical activity, it can help us see how investors reacted to economic and financial market events. For more information about the DII, read our FAQs.

The start of the new year saw the DII remaining positive for the tenth straight month at +24, despite some volatile activity in the market that could have eroded some of that bullish sentiment. Investors sold riskier assets in bulk, a move that hasn’t been seen since the start of the pandemic. The S&P 500 Index and the NASDAQ Index dropped significantly and finished the month down -5% and -9%, respectively. Comparatively, the S&P/TSX Composite Index finished down -0.6% over the same time period. The question then is how did the DII remain in positive territory? Let's find out.

Going off the grid
The answer becomes clearer when you look at the bigger picture. January saw investors selling their U.S. equities and moving their money to Canadian equities. So, while the market news was all about the dip, the DII sentiment stayed north. In particular, U.S. tech stocks were the big loser. The massive selloff in Technology came on the heels of growing fear that the (then) upcoming U.S. Federal Reserve rate hiking cycle would take the wind out of their sails. If we look at the sentiment for the Technology sector only, the DII dropped 18 points, to –13. Apple Inc. (APPL) and Nvidia Corporation (NVDA) being some of the top sold securities. The quickest demographic to drop them like hot cakes? Gen X and Boomers. Within the active trader and long-term investor groups, sentiment was most negative for the latter. On a geographic basis, the drop in sentiment was mostly driven by investors in Ontario.

Home team advantage
While investors were saying salut to their U.S. Tech stocks, they were saying bonjour to Canadian Energy and Financials. January saw oil prices skyrocket reaching a 7-year high! This caused a domino effect of improving supply and demand fundamentals—throw in rising geopolitical risks between Russia and Ukraine in the mix and Canadian Energy stocks must have been looking pretty good to investors as the sentiment moved up. What was the Energy sentiment you might ask? A high +24, with Suncor (SU), Enbridge (ENB) and Crescent Point Energy Corp (CPG) leading the way as the most bought stocks. Energy’s positivity was felt by all age groups with Gen X and Boomers leading the way. Active traders were clearly chasing trends as they drove sentiment higher. When it came to location, investors in Ontario were most optimistic on Energy, followed by the Energy heavy provinces in the Prairies and Territories.

Cash flow
When it came to where the money trail led last month, Canadian Financials, Royal Bank of Canada (RY), Toronto-Dominion Bank (TD) and Bank of Nova Scotia (BNS) were the top bought stocks by DIY investors. A potential reason for this uptick? The prospect of higher interest rates and, in turn, higher bank profits. On a demographic basis, Financials were popular across all age groups, led by Boomers and Traditionalists. Just as with Energy, active traders were the ones pushing Financials sentiment higher. With so many financial institution headquarters based in Ontario, this may be why investors from this province were arms and legs above the rest when it came to sentiment towards Financials.

Go Team Canada
An interesting corollary to January’s deke was that Canadians stayed invested. They dropped U.S. tech and bought Canadian Energy and Financials, but they didn’t move their investments off the table into cash. So there you have it. Canada’s victorious month explained in a nutshell, with the baffling sight of a positive investor sentiment amidst market turmoil quickly making sense.

The TD Direct Investing Index (DII) provides data and insights relating to historical self-directed investor activity. By looking at this historical activity, it can help us see how investors reacted to economic and financial market events. For more information about the DII, read our FAQs.

Since the beginning of 2022, the markets have stumbled and soared in reaction to one event after another. We started with the threat of higher interest rates from the U.S. Federal Reserve, sky high inflation, and Omicron. Then, on February 24^th, Russia invaded Ukraine. While the markets have been affected, it’s important to remember how devastating this event is, regardless of its impact on investors.

Retail investors had a counter-intuitive response: the DII investor sentiment rose strongly, to a 15-month high of +60. Remember that the DII sentiment score ranges from +100 for most bullish to -100 for most bearish. This very bullish sentiment followed decent gains from the TSX (+2%), which has benefited from its high weighting of commodity stocks. With the Russia – Ukraine conflict raising the risk of financial market stress, the question is what could have driven such strong gains in sentiment?

Commodity prices lead
The threat of sanctions on Russia caused massive price movements in a host of commodities, ranging from barrels of oil to bushels of wheat. This had the Energy and Materials sector sentiment score up to a high of +31 and +21, respectively. With respect to Energy, Suncor (SU), Enbridge (ENB), and Arc Resources (ARX) were the top buys, with investors potentially speculating that they would be buoyed by higher energy prices. On the materials side, Barrick (ABX), Agnico (AEM), and Lithium Americas Corp (LAC) were the top buys. We found that on a demographic basis, Gen X and Boomers were the drivers of positive commodity sentiment. Geographically, investors in Ontario, BC, and the Prairies showed the most positive sentiment for Energy, whereas it was really only investors in Ontario that drove positive sentiment for commodities.

Trading in Tech for Energy
The most negative sentiment of the month came in the I.T. space, with the DII showing a drop of -13, matching the negativity from January. These stocks may have been impacted by expectations of higher interest rates, with the US Fed set to embark on an aggressive tightening cycle. As Tech firms are typically high growth companies, higher interest rates have an outsized impact on the valuation of these firms. Shopify (SHOP), Lightspeed (LSPD), and NVIDIA (NVDA), were the top sold stocks. We found that Boomers were most likely to sell Tech stocks, followed by Gen X and then Traditionalists. These stocks were also sold equally by Active Traders and Long-Term Investors. We also found that investors from provinces that bought into Energy stocks (Ontario, BC, and Prairies), actively sold Tech stocks. For some, this implies there may have been a sector rotation strategy afoot.

Forging ahead through uncertainty
The last few years have been anything but normal, however, as the DII has shown us month over month, this does not necessarily mean Canadian investors are headed to bearish territory – in fact, investor sentiment continues to rise. It has shown that events, such as geopolitical crises and global pandemics, can affect the market differently and may even be different depending on which country the market resides. When it comes to the current geopolitical crisis, some Canadian stocks have seen growth, Energy and Material stocks in particular, and this is because of an abundance of resources that exist within Canada.

The TD Direct Investing Index (DII) provides data and insights relating to historical self-directed investor activity. By looking at this historical activity, it can help us see how investors reacted to economic and financial market events. This month's DII takes into consideration data from January 27th to February 25th. For more information about the DII, read our FAQs.

In March, the DII investor sentiment dropped slightly from February's 15-month high of +60 to +51. Remember that the DII sentiment score ranges from +100 for most bullish to -100 for most bearish. This bullish sentiment kept in step with a 4% gain in the TSX, which continues to benefit from its heavy weighting of commodity stocks. The oldest generation – the Traditionalists – ranked the most positive in sentiment – given their exposure to commodities. The youngest generation – Gen ZY – were the least positive, as tech stocks continue to stumble.

What goes up
March felt like opposite day in the markets. The sectors and securities we were accustomed to seeing on top continued their downward trajectory while previously sluggish sectors and securities kept going up.

Let's break it down. The top sectors in March were materials and energy, with Canadian investors showing a 24% weighting in their portfolios -- not so long ago, these same stocks showed only a 7% weighting. We could see this played out as the Canadian market outperformed globally. The focus on commodities, from nickel, gold, and copper to wheat and lithium, was in sharp contrast to these securities being outperformed by high-flying Tech stocks. Top securities in materials were Nutrien (NTR) followed by Teck Resources (TECK.B) and Barrick Gold Corp. (ABX).

Tech reboot? Or just Control Alt Delete?
The TD Direct Investing Sentiment bases its sectors on the Global Industry Classification Standard (GICS). Why is this relevant? Because stocks you consider tech stocks may not be classified by GICS as “I.T.”. A good example is the FAANG stocks (an acronym for five major tech companies Meta (formerly known as Facebook), Amazon, Apple, Netflix, and Alphabet (formerly known as Google), which fall in multiple sectors. When we look at what's happening at the big tech firms, we may be looking at I.T. (Apple) or Consumer Discretionary (Amazon). Which brings us to the third most popular sector this month: Communications. This sector includes both Meta Platforms Inc. (FB) and Alphabet Inc. (GOOG), and both made an appearance in the top five bought. Over in I.T., we saw the sector bounce a bit, but it remained on the bottom, with Shopify (SHOP), Advanced Micro Devices (AMD), and Nvidia (NVDA) as the top sold.

The best of times, the worst of times
The Canadian resurgence was a validation to many investors who had shown confidence in the market in the previous month. But we also saw currency, inflation, interest rates, supply chains, and more lurking in the background– you know something might set off a tumble, but you don't always know what or when. It is a bit bumpy. So, hold on and enjoy the ride.

The TD Direct Investing Index (DII) provides data and insights relating to historical self-directed investor activity. By looking at this historical activity, it can help us see how investors reacted to economic and financial market events. This month's DII takes into consideration data from February 28th to March 25th. For more information about the DII, read our FAQs.

For the first time in two years, investor sentiment dropped into bearish territory. The April score for the Direct Investing Index (DII) plummeted to -12, a massive move down from March's +51. Remember that the DII sentiment score ranges from +100 for most bullish to -100 for most bearish. As we sliced and diced the data, we saw a few glimpses of bullish (above neutral) sentiment in niche groups. For the most part, however, each sector, demographic, and trading style were bearish.

This may be the culmination of the fear and worries caused by, in no specific order: conflict in Ukraine; the market swing from tech to commodities; increased inflation; supply chain struggles; the increase of interest rates; fears of a slowing global economy; and China’s Covid lockdown. Canada’s retail investors hunkered down.

As the Markets Rotate
The flight to safety, one of the four cornerstones (proxies) that make up the DII, had a major role in our bearish sentiment. For example, there was a rout in growth stocks as investors left behind volatility and rotated to energy or to the sidelines in cash or cash equivalents (like fixed income).

Specifically, investors took their money out of Technology and put it in smaller sectors (like Energy). Because the Technology sector had been such a big part of people's portfolios, this shift was notable: tech heavy Nasdaq, for example, had the worst month since 2008. The FAANGs really showed their heft. Netflix, Meta, and Alphabet (GOOG) collectively lost USD $1 trillion in April, with Amazon (AMZN) and Apple (AAPL) reporting earnings after the end of this DII reporting period. However, investors used this pullback to add to positions in some of these beaten-up names such as Netflix (NFLX) and Meta (FB). The more economically sensitive semiconductor subsector also came under pressure last month with Nvidia Corporation (NVIDIA) and Advanced Micro Devices (AMD) among the net sold.

Going Up
Now over to Energy. Supply chain issues and more signs of reopening, such as airline travel, looked to push the demand and sentiment for Energy to the top position. Suncor (SU), Crescent Point Energy Corp (CPG), and Enbridge (ENB) were the top bought. The second highest sector, Consumer Defensive, showcased how investors were still looking for profits. Veru Inc. (VERU), a biopharmaceutical company, received FDA approval for phase 2 trials and was top bought.

Going Down
On the TSX, Materials plunged and became the most pessimistic DII sector. Copper was down, platinum was down, even gold lost its luster. In value, they're still up year over year, but the pull-back may be related to a retail investor desire to avoid exposure to these materials given the slowdown in China. Teck Resources (TECK.B) and Barrick Gold (ABX) were among the top stocks sold. Financials, another closely watched sector, retreated from its mid-February peak and was of heightened interest as investors expected the Bank of Canada to continue withdrawing monetary stimulus to tame inflationary pressures.

April: Welcome to the Waiting Place
Aside from Elon Musk and his Twitter (TWTR) drama, April’s sentiment was in the doldrums. Long-term investors and active traders were negative. The sentiment of all age groups dropped, with Boomers being the most pessimistic. Geographically, every region went down, with Ontario’s gloomy outlook showing the deepest drop. And so we waited, sitting on our piles of cash, wondering when things would go back to normal – and when they do, if it is the same normal or a new one altogether.

The TD Direct Investing Index (DII) provides data and insights relating to historical self-directed investor activity. By looking at this historical activity, it can help us see how investors reacted to economic and financial market events. April's DII takes into consideration data from March 28 – April 27. For more information about the DII, read our FAQs.