How To Profit From The Flood Of New Retail Investors

You might have missed it in the middle of Bitcoin's bull run, earnings, and Warren Buffett's portfolio rebalancing…

But I was paying attention, and to be fair, some analysts were, too.

Global equities just had their biggest two-week inflow of capital ever, as in, the history of the stock market.

Retail investors, on their own, not including institutions, plowed $5.8 billion into stocks in just five sessions, while a record high number of call options have been traded over the past 20 sessions.

These folks are almost a force of nature to deal with, like the weather, and their style and taste for investing has multibillion-dollar implications for, well, everyone.

Here's what it means – and what to do about it.

Wall Street's New Biggest Shot-Callers

There's no shortage of theories as to why new, mobile app-based investors have poured into the markets, but there's one that works just as well as any I've heard.

One of the biggest changes coronavirus forced on society: no live sports.

No live sports means no sports betting. That's an $85 billion global industry, and about 10% of that comes from right here in the United States. For a few weeks, the hottest line in Las Vegas wasn't who would win the World Series, but whether there would even be a World Series.

Of course, we've managed to pull off a World Series and a Super Bowl, but there was a while there when it was completely up in the air. During that time, people desperate for "action" hopped on mobile apps like Robinhood and started, basically, gambling in the capital markets.

Why it happened isn't as important as that it happened. When you combine that "new blood" with trillions in Fed stimulus, you've got a recipe for a truly historic bull run.

It helped drive the incredible rally that took markets from the "COVID Crash" March 2020 lows to today's all-time highs – at a time of truly scary unemployment and deep uncertainty.

1 2 3
View single page >> |

Disclaimer: Any performance results described herein are not based on actual trading of securities but are instead based on a hypothetical trading account which entered and exited the suggested ...

more
How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.