- US stocks have been hammered by volatility this week.
- Among retail investors, one cohort is feeling the pain more, said Charles Schwab's Liz Ann Sonders.
- "Some of our newer, younger, more trading-oriented investors are feeling this a little bit more acutely," she told Bloomberg TV.
As US equities have whipsawed in the past few days, with the Dow Jones Industrial Average swinging more than 1,000 points in one session, investors have been on the edge of their seats. However, one cohort is feeling the pressure more deeply, according to Charles Schwab managing director and chief investment strategist, Liz Ann Sonders.
"Some of our newer, younger, more trading-oriented investors are feeling this a little bit more acutely, and the questions are more short-term in nature: When is this going to end? Where?" Sonders told Bloomberg in a TV interview Thursday.
She said seasoned investors are more used to volatility and typically have longer-term strategic asset allocation plans in place.
"They adhere to the disciplines of diversification and rebalancing," she told Bloomberg. "They're more calm in this environment."
Sonders, who has been with the financial services firm for more than two decades, was responding to a question about investor sentiment amid a more hawkish Federal Reserve that signaled rate hikes are set to begin in March.
On Wednesday, Chairman Jerome Powell acknowledged that inflation may stay high for longer than expected and admitted that a rate hike at every meeting of the Federal Open Market Committee this year is not off the table.
While some have criticized Fed policy through the pandemic and questioned its ability to rein in inflation — including Goldman Sachs president John Waldron — Sonders said the central bank's determination to ease monetary policy is "the real deal."
"Just because we get financial market volatility, if it doesn't threaten financial system stability, then we're going to lift off here sooner than what was thought only a few months ago," she said.
The volatility in US stocks this week began with jitters that a Fed determined to curb inflation will turn aggressively hawkish. That included worries the central bank may start to shrink its nearly $9 trillion balance sheet.
The consensus is for the Fed to increase rates four times this year, starting with a 25-basis-point increase in March, though some analysts believe policy makers could move even more aggressively. Even before Wednesday's FOMC announcement, JPMorgan boss Jamie Dimon had been predicting the Fed will raise interest rates as many as seven times in 2022.