Day traders know a bubble when they see one, and they want to enter

This is a bubble, according to a survey among retail investors. And they do not want to miss it.

An E * Trade Financial survey found that about three-quarters of retail investors believe the market is “fully or somewhat” in a bubble, a 3 percentage point increase over the previous quarter. At the same time, the bullish sentiment increased and rose by 61% to pre-pandemic levels.

“Optimism increased as the market reached new highs of all time, vaccines increased, incentives continued and revenue estimates were high,” said Mike Loewengart, managing director of investment strategy at the firm.

Stocks have been in tears for more than a year, and for most of the time, bubble warnings have been issued. But the latest upswing has pushed valuations to levels last seen in the dot-com era, and with returns rising, the chorus has grown so loud noisy investors have taken notice. But most ignore it – just as they did while the S&P 500 rose 83% from the pandemic lows – and bet there is money to be made as long as government spending and the Federal Reserve keep the policy loose.

They consistently bought when the benefits scrambled away and earlier bet on stocks that would benefit most from returning to normal economic activity. Over the past twelve months, they have plowed an average of $ 1.2 billion in equities daily, according to data from VandaTrack.

In some quarters, the relentless buying by individual investors raises concerns that the group is poised to retreat, creating a risk for the broader market. U.S. household allotment shares were likely to rise to 40% in April, surpassing the dot-com peak and reaching the highest level since the early 1950s, according to an estimate by JPMorgan Chase & Co.

At various times over the past year, the retail frenzy has caused concern by professional investors who have warned that their involvement, similar to the early 2000s, means too much euphoria. But they have not yet scrambled away. According to Bank of America Corp, individuals were net buyers of shares for a sixth consecutive week, according to the firm’s latest data on client funds. This is in contrast to professional investors who have taken advantage of the recent gains to offset investments.

E * Trade surveyed nearly 1,000 retail investors who manage at least $ 10,000 in their online brokerage accounts. The survey also showed that almost half believe that the economy is in a better state, an increase of 15 percentage points compared to the results of the previous quarter. And while concerns about virus-related risks have eased amid recent vaccine deployments, concerns about market volatility have increased and are now the biggest risk for investor portfolios.

According to Max Gokhman, head of asset allocation at Pacific Life Fund, retail investment will continue to play a major role in markets, depending on what happens. Advisors.

‘What happens if there is no new fuel for this rocket to the moon? Many of the crowd with diamond hands may realize that they paid too much for sloppy cubic zirconia, ”he said, referring to a popular phrase that describes strong gumping. “Whether they stay in the markets thereafter will determine the long-term effect of retail.”