Individual investors started 2021 at a rapid pace. Now they are finally showing signs of fatigue.
The trading activity among non-professional investors has slowed in recent weeks after a leading year, with the group spending less money on everything from US stocks to bullish call options. The daily average trading for at least two online brokers has declined from their 2021 highs. And across the industry, traffic to brokerage sites, as well as the amount of time spent on it, has dropped.
The decline in enthusiasm is a sharp turnaround from a few months ago when the insane activity of individual investors was the center of the financial markets. While “meme stock” stocks soared in January, millions of small investors piled up, kicking off an already robust trend toward small investments to an excessive degree. In a mania, unlike market observers have never seen before, individual investors have soared into stocks like GameStop Corp, pushing brokerage platforms to the top of the app store rankings. The trading volume increased so much that many brokers struggled to keep their platforms running smoothly.
According to individual investors and analysts, the recent downturn is a series of factors, including concerns about volatility in growth stocks – a group in which small investors tend to be heavily invested. Since February 12, when the technology-heavy Nasdaq Composite reached its latest record, individual investors, including Tesla Inc., NIO Inc. and Apple Inc., each dropped more than 9%.
“Like any investor, you are not going to add fresh money to a market that does not have a clear catalyst to drive stocks 5 to 10% higher,” says Viraj Patel, global macro strategist at Vanda Research. have been hibernating for the past few weeks. “