Call it the Year of Individual Investors.
Non-professional investors have turned over financial markets and their Powerful entrance In the arena last year. JMP Securities estimates that in the first half of 2021, the number of new securities accounts opened by individual investors was more than 10 million, almost in line with the total created throughout 2020.
they have Pushed up the stock price Of companies in the range from
GameStop Co., Ltd.
AMC Entertainment Holdings Co., Ltd.
— —Both got This year, 1,000% and more than 2,700%, respectively. They sent the cryptocurrency Dogecoin, Originally created as a joke, Soaring.And they united together Cheeky forum Inflicting penalties on institutional investors.
Here are four ways individual investors can continue to shape every corner of the US market.
Their trading volume continues to grow.
For years, retail investor trading activity was rarely scattered on Wall Street. It began to change in 2019, with online brokerage firms moving to fee-free trading all at once. The Covid-19 pandemic is even more Acceleration of personal stock interest Last year, it allowed people stuck at home to try to trade through historic market volatility.
Combined, these forces combined to reach 20% of individual investors’ share of US equity trading volume last year, about double that of 10 years ago, according to data from Larry Tab, head of market structure research at Bloomberg Intelligence. became.
Its market share is increasing this year. In January, when individuals were piled up on so-called Meam stocks, individual investor activity accounted for 26% of all stocks traded on the US stock market, and some online brokerage firms themselves accounted for significant total trading volumes. It occupied the part of. Tabb estimates that retail investor activity traded at Robinhood Markets Inc. accounted for approximately 4% of total US trading volume in January, with E * Trade Financial activity at 2.4%. His figures exclude trading activities by e-commerce companies that carry out transactions with individual investors.
These numbers have been declining since January, but Tab expects the level of activity of retail investors to continue to rise.
“They are definitely influential and will never disappear,” he said. “We believe that retailers will drive 18% to 22% of the market next year or so.”
The power of retail investors in recent months, long thought to be ridiculous money on Wall Street, comes from hedge fund managers. Chief executive officer To the regulator. One of the reasons: they have real money behind their move.
According to Vanda Research’s Vanda Track data up to Monday, retail investors have poured a net of $ 140.57 billion into the US stock market this year. This is an increase of about 33% over the same period last year, more than six times that of the same period in 2019.
They tend to get in and out of trends quickly.
It’s no wonder that individual investors are enthusiastic about entering a particular transaction. Take, for example, GameStop in January. Stock prices soared to $ 483 on January 28, rising about 643% between the closing price on January 22 and four trading days.
Thanks Ubiquitous on social mediaIndividual investors tend to stack up deals together for either individual stocks or a wide range of sector themes and attack quickly to raise prices within hours or days. Almost as quickly, as the data show, retail investors withdraw from those transactions and move on to the next one.
For example, consider a basket of memetic stocks that works prominently on Reddit’s WallStreetBets platform. VandaTrack data shows that investors have moved to the basket. This includes GameStop, AMC,
blackberries Co., Ltd.
— Promptly in January, just three weeks later, before a significant abandonment of trade.
Inflows into the basket have skyrocketed again in recent weeks, but as the data have already shown, the flow is changing. Basket prices fell 17% last week as inventory inflows began to slow, Banda Research said in a note Wednesday morning.
“This will change the way these spaces can be traded. The days when you can buy and hold small names and expect to make 50% revenue over time are over. Viraj Patel, Global Macro Strategist at Vanda Research, said: “Market timing is a close friend of app traders in this area.”
Due to the activities of individual investors, short sellers are now canceling bets on meme stocks.
GameStop’s surge earlier this year spotlighted short-selling practices, or when betting on companies by selling them in the hope that investors could borrow stocks and buy them back at a lower price. .. Individual investors targeted GameStop in January as the level of short-term sales activity on equities increased.
In what was cast as modern-day David and Goliath, GameStop’s share price soared, allowing individual investors to inflict sharp losses on shortsellers, and bearish investors buying back shares to limit losses. I was forced to. Some investors have significantly reduced short positions.
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Interest in short selling is declining sharply among individual businesses. According to Dow Jones Market data, GameStop’s short interest ratio is currently around 21%, more than 100% last year, compared to the beginning of the meme stock trading frenzy in January. Some other meme stocks that are popular on social media have seen a significant drop in interest in short selling.
More transactions are coming from the exchange.
The increase in private investor activity corresponds to the increase in transactions on public stock exchanges. This is also known as “dark trading”.
When a retail investor trades on an online brokerage platform, the trade is typically routed to an e-commerce firm such as Citadel Securities or Virtu Financial Inc. These companies usually execute orders personally, not, for example, in New York. Stock exchange.
Online brokerage firms and e-commerce companies often say that practice Benefiting non-professional investors By executing their transactions at a slightly better price than they get elsewhere. However, this practice is being scrutinized more and more this year, partly due to the lack of transparency surrounding trade.
According to Rosenblatt Securities data, off-exchange trading volume in the US market reached a record 47% in January.
And within individual stocks, the numbers can be even higher. In a recent note, Rosenblatt,
Sun dial grower Co., Ltd.
It happened on the exchange in May. For AMC, that number was 57%.
Rosenblatt’s partner Justin Shack said:
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It’s not just AMC. Retailers increase stock market pulls.
Source link It’s not just AMC. Retailers increase stock market pulls.