Since the start of the COVID-19 pandemic two years ago, a new breed of retail investors has emerged, pumping extra money into the stock markets and taking Wall Street to places it never dreamed of, such as. B. Meme stocks.
Our call of the dayfrom the founder and chief executive officer of competitive stock trading app Zingeroo, says institutional traders would be wise to pay attention to an increasingly sophisticated retail investor.
Before the pandemic, notes Zoë Barry, head of Zingeroo, retail volume represented 10% of traded volume and didn’t share trade ideas — often seen in Gen X and older people. That number then peaked at 25%, and with it came much more talkative investors.
“[Wall Street] totally underestimated what it would be like if 25% of volume turned in one direction and away from institutional ones,” Barry said in a recent interview with MarketWatch.
“…Gen Z has actually started sharpening their pencils and researching what to do in a bear market.”
— Zoë Barry, CEO of Zingeroo
“And now Wall Street is all about sentiment data and they look at what people are seeing, but they also want the key trading numbers because there’s a gap between what people are talking and saying about online and what what they’re actually trading,” she says.
A former Dawson Capital analyst, Barry said she wants to know what traders are saying versus what they are trading and why there are inflows in certain stocks. “If I were an institution, I would be very, very cautious about shorting a stock that has the potential to become a heartthrob for retail investors,” she said.
Barry’s app, which launched last fall, is a rival to Robinhood HOOD, +0.48%, but has “bullpens” – chat groups to discuss investment issues – and “zones” where performance can be compared can be compared to others and trades can be checked through “trading cards”.
The serial entrepreneur said that 80% of Zingeroo users are Millennials and Gen Z, with the rest being Gen X plus. The younger crowd, she said, considers trading activities their so-called “MBA” — investing in themselves and their own financial diversity.
“I think young retail investors are starting to have a longer-term perspective than you know what’s happening in the markets this week. I think that’s a positive for them overall,” she said. “They invest in the stock market and they invest in themselves and increase their financial literacy, and that’s positive.”
And in the first part of the quarter, there was a lot of talk about young investors getting lost in the wilds of a bear market. “And what we saw was Gen Z actually started sharpening their pencils and researching what to do in a bear market,” Barry said.
Regarding the differences between generations, she said that the category “Gen. X plus” is automatically liquidated via stop losses, millennials tend to buy the dip, while Gen. Z is even more discerning. For example, noting recent action in the SQQQ SQQQ, -3.67%, a triple leveraged inverse exchange-traded fund that tracks the Nasdaq 100, she called this “definitely unusual behavior for a retail investor.”
“They were basically saying that we’re not sure which of the growth stocks will be hit the hardest, so as an individual investor I’m not smart enough to pick exactly which stock will go down,” Barry said. They also don’t worry about hitting the exact bottom of a market, instead looking at stocks that they believe have a greater chance of becoming a fundamental success in the future.”
And that crowd “understands the future tools that are happening right now,” and despite the geopolitical meltdown and rising inflation overall, are more optimistic about themselves, their future potential and the economy at large, Barry said.
Read: AMC, GME, and Meme stocks are back in the spotlight — how will pro traders handle them this time?
The Buzz
Twitter TWTR, +25.54% Shares are up 25% on news that Tesla CEO Elon Musk has taken a 9.2% stake. Tesla TSLA, +3.60% deliveries, meanwhile, rose in the first quarter but missed Wall Street expectations even as JPMorgan raised its price target.
Starbucks SBUX, -5.71% announced a halt to share buybacks, coinciding with the return of Howard Schultz as chief executive.
The US and Europe are preparing further sanctions against Russia amid chilling images and reports of unarmed Ukrainians being executed in Bucha, Kyiv and elsewhere.
Read: The war in Russia could further escalate car prices and shortages
Ukrainian President Volodymyr Zelenskyy made a passionate Grammys performance for his country. At the controversial awards ceremony, Jon Batiste was named Album of the Year, among other highlights.
JPMorgan CEO Jamie Dimon said the ongoing war is bad news for the global economy.
Amid lockdowns in China, authorities have reported a new subtype of the Omicron variant.
Factory orders are imminent in a thin data week that will include Federal Reserve minutes. And San Francisco Fed Chair Mary Daly said the case for a half-point rate hike in May had grown louder.
The markets
Shares DJIA, -0.19% SPX, +0.29% COMP, +1.15% are mixed with oil prices CL00, +3.85% BRN00, +3.29% rising as investors talk about possible consider increased sanctions against Russia. The inversion of the curve remains in place, with the yield on the TMUBMUSD02Y 2-year note being 2.444% higher than the TMUBMUSD10Y 10-year note, 2.421%. Bitcoin BTCUSD, -0.86% eases a recent run.
The graphic
“A consistent theme is strong returns from the yield curve inversion point to the final stock market top. It’s also worth noting that if the 1/4/22 S&P 500 goes high, it would mark the first stock market top in 40 years before the inversion,” a team of strategists at Evercore said in a note. Here is the diagram:
Note that Goldman Sachs also considered this issue in a recent research paper, noting that returns on the S&P 500 were typically positive in the two years following the yield curve inversion, except during the hyperinflationary period of 1973, when it eventually became one Downtrend came market.
Read: Is a Yield Curve Inversion a Dire Sign for Mortgage Rates? Does this really mean a recession? Economists step in.
The tickers
These were the most searched tickers on MarketWatch as of 6 a.m. Eastern Time:
Random Reading
German man accused of getting 90 COVID-19 shots to sell his cards to those wanting to avoid shots
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