BBC
According to research, retail investors bought prominent tech shares during the recent U.S. stock market rollercoaster, taking advantage of a severe collapse. They also displayed prudence.
Individual investors were caught up in the giant global stock market sell-off on Monday, triggered by anxiety about economic data and earnings news and exacerbated by the unwind of yen-funded trades, but many continued to buy even as indexes fell 2.6% to 3.4% in heavy trading.
Vanda Research, a New York-based market research and analysis business, revealed that individual investors caught in the market storm bought shares of Nvidia Intel and AMD They also increased buying of a 20-year Treasury bond ETF.
“There was no retail capitulation,” said Marco Iachini, Vanda’s senior vice president of research. The data represents self-directed individual investors who trade without a brokerage business, financial adviser, or private bank.
“Retail investors continue in their dip-buying spree,” he said.
A spokesman said Robinhood Markets earned $1 billion from retail investor clients in the first week of August, citing Vladimir Tenev’s data. Compared to a second-quarter daily average of less than $350 million, $500 million was deposited to customer accounts during Monday’s sell-off.
On Robinhood’s earnings call on Thursday, Tenev told analysts that Blue Ocean ATS, which handles overnight trades, couldn’t handle “extreme demand” from clients.
Blue Ocean declined comment.
In another report, JP Morgan analysts said retail investors were “aggressive net sellers” on Monday, with most of the selling pressure coming in the first hour. The bank declined to comment.
Vanda and JPMorgan said retail investors bought hard on Tuesday and Wednesday during the market’s comeback. Vanda observed on Thursday that retail investors’ interest in the iShares 20+ Year Treasury Bond ETF rose throughout the recovery, making it the second-most-actively purchased product after Nvidia shares by Thursday morning.
Iachini said that may mean “mom-and-pop traders” are worried about markets and searching for a safe haven for their holdings.
According to Rob Austin, chief of research at Alight Solutions, investors in 2 million 401(k) retirement plans were actively transferring assets out of stock funds and into money markets and fixed-income products.
“Trading was about eight times average,” Austin said, but only 0.1% of the $200 billion in assets the firm oversees changed investment strategies.
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