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Retail Investors Power the Trading Wave With Record Cash Inflows

edited July 7 in Other Investing
“Retail investors keep pouring money into markets, even as many of their favorite meme stocks and cryptocurrencies have languished. In June, so-called retail investors bought nearly $28 billion of stocks and exchange-traded funds on a net basis, according to data from Vanda Research’s VandaTrack, the highest monthly amount deployed since at least 2014. That even trumped the amount retail traders spent in January during the first meme-stock frenzy.

“The activity underscores the enduring influence of ordinary investors in markets. When the Covid-19 pandemic ushered in a wave of first-time traders, many market observers suspected these investors would retreat when the economy reopened. Instead, individual investors have grown in number: More than 10 million new brokerage accounts are estimated to have been opened in the first half of this year, according to JMP Securities. That is around the total for all of 2020 …

“Retail investors’ enthusiasm is in contrast to professional money managers’ growing and ease about the market outlook. This has risen as markets on the surface appear placid but volatility has grown around individual stocks … (One) gage of retail traders’ sentiment currently shows that the group is nearly 70% confident that the US stocks will keep rising over the next three months. Meanwhile, professional traders are only about 44% confident that stocks will rally during that period.”

WSJ July 6, 2021
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