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Financial conditions are not expected to improve drastically until the all-clear is sounded on COVID-19.Ī prime example of the headwinds facing the stock market is the parabolic surge in infections in the United States, with more than 100,000 residents infected.įor this reason, volatility in the Dow or S&P 500 could be misinterpreted as an all-clear by long-term retail investors looking to scoop up some cheap stocks. With credit downgrades mounting even the United Kingdom felt the axe from Fitch, as it was downgraded to AA- on Friday. economic data has fallen off a cliff as unemployment has skyrocketed due to the sudden economic stop forced by the coronavirus. Still, despite these moves, mom and pop are still very interested in buying stocks at these levels, and that might be premature. Wall Street algos appear to have taken this as a buying opportunity, as they have carried the stock market dramatically off its lows during a wild week of trade. Retail strongholds like ETF’s are starting to see some moderate outflows. Recent evidence has suggested that a number of smaller retail clients, who had resolutely held on during the crash, have finally buckled, and passive long-term ETF investments have seen some outflows. Source- Twitter Some Signs Of Mom & Pop Investors Capitulating Source- Google Trendsīoth these charts do indicate a slight reduction in the number of searchers, but unfortunately the period they cover matches with a sharp relief-rally in the Dow. Source- Google TrendsĬonfirming the surge of general interest that this year’s stock market crash has brought, searches for “Dow Jones” are also extremely elevated relative to their average. As you can probably guess, someone who is making this query is less likely to be a sophisticated investor. Recent Google Trends data has indicated that during the month of March, searches for “how to buy stocks” are through the roof. This means that small “mom and pop” investors are usually heavy buyers of the stock market at peaks before crashes and are buying the least during bottoms. Tracking the S&P 500 for the last 30 years demonstrates that retail investors are almost always positioning in a counter-cyclical manner. Whether you blame over-enthusiastic wealth managers on CNBC or the stock market dynamics of fear and greed, significant moves by retail investors nearly always put them on the wrong side of the major-moves in equity prices.

Stock Market Crash Sparks Huge Interest From Retail Investors A huge stock market crash has record amounts of retail investors looking to buy stocks. Unfortunately, history dictates that retail investors are nearly always on the wrong side of a stock market crash. Google Trends data suggests retail investors are desperate to avoid missing out on buying the recent dip. Guggenheim CIO Scott Minerd is warning investors against being complacent and not getting caught up in a potential bull trap.Ī dramatic surge in the Dow Jones and S&P 500 has many investors clamoring to buy stocks.Unfortunately, retail investors are usually on the wrong side of stock market crashes, suggesting there could be more pain ahead.Google Trends data shows an incredible surge in searches for the “Dow Jones” and “how to buy stocks”.