Traders Remain Cautiously Bullish, with Concerns About the Political Landscape, a Potential Market Correction, and Stagflation

Charles Schwab, a leader in investing and trading with $11.59 trillion in total client assets and more than 7 million daily average trades, today announced the findings of its Q4 2025 Trader Sentiment Survey, revealing that traders remain decidedly bullish even as concerns about politics, market overvaluation and stagflation persist.

According to the survey, 57% of traders describe themselves as bullish on the market, matching last quarter’s number which was the highest level of optimism recorded since the survey was established in 2022.

Despite trader bullishness, they also acknowledge the potential for some headwinds - two-thirds (67%) of traders believe the market is currently overvalued, up from 57% who said the same last quarter. And more than half (57%) say stagflation -- the combination of slow growth and persistent inflation -- is somewhat or very likely in the next 18 months.

Traders cite the political landscape in Washington, D.C. (19%) as their top concern for the quarter, followed closely by fears of a market correction or increased volatility (a combined 21%).

Their market expectations are driving roughly a quarter of traders to invest in gold (27%) and crypto (23%) but more (42%) are moving assets into the stock market and/or engaging in options hedging (32%).

“Traders are currently in a cautiously bullish stance,” said James Kostulias, Head of Trading Services at Charles Schwab. “They’re confident in their ability to navigate uncertainty and see opportunities in the market, but they’re also realistic about valuations and the potential for volatility as we move toward 2026.”

Economic Crosscurrents

The survey finds that most traders (57%) expect inflation to hold steady or decline over the next six months. While that represents a majority, it’s down from the 72% who said the same last quarter. Meanwhile, the number of traders who see stagflation as likely in the next 12 to 18 months jumped from 47% last quarter to 57% now.

Expectations for inflation over the next six months
	Q3 outlook	Q4 outlook
Inflation will decline	17%	8%
Inflation will hold steady	55%	49%
Inflation will reignite