Business & Investment

Retailers have a strong appetite, even as the frenzy of stock purchases cools

© Reuters.File Photo: File Photo: 3D printed Robin Hood logo and $ 1 bill appear in front of the GameStop logo

John McCrank

New York (Reuters)-Retailers have shifted from “meme stocks” to large caps and exchange-traded funds, and while activity has eased from its peak in January, the blazing pace of opening new retail accounts is possible for non-experts. It means high sexuality to remain the power of the market.

Retail trading levels soared earlier this year, helped by the following stock buying frenzy: GameStop Corp (NYSE :). However, data show that investors are expected to use stimulating checks in their transactions, but pullbacks have continued since then.

Eric Liu, co-founder of Vanda (NASDAQ :) Research, which tracks retail trading activity, said:

Liu said small investors who sold favorites like GameStop in February or March could have been burned because most of the names retailed in January fell between 20% and 30%. He said it was highly sexual.

As a result, some investors may have withdrawn some money from the market and sent others to ETFs, he said. Buying an ETF in a single stock is a more conservative transaction because it spreads the risk.

JP Morgan (NYSE :) analysts said in a Wednesday note that retail activity centered on small caps was close to year-to-date lows, but in the past few weeks it has focused on large caps like Apple (NASDAQ). It picked up. :) And Boeing (NYSE :), and ETFs like Invesco QQQ.

Analysts at Jeffreys (NYSE :) have seen overall retail volumes decline, but far outperform almost all other periods, and other retail engagement indicators such as margin balance are strong. It states.

so Charles Schwab (NYSE :) Corp, activity rose slightly in the week of April 12, falling from about 9.4 million in the week of February 22 for the sixth straight week, with an average of over 6 million transactions per day. It was. : // Show.

“We moved to March, and now in April, client involvement has eased to some extent,” said Walter Bettinger, Schwab’s CEO. “It’s still rising, but it appears at levels that may be more sustainable in the long run.”

(Graphics: Average Daily Trading by Charles Schwab Corp Customers-https: //

Still using the app

However, the underlying strength of opening an online brokerage account means that analysts have not yet counted individual investors. Individuals have entered the market in large numbers since October 2019, when major brokers like Schwab and Fidelity dropped transaction fees, following start-ups like Robin Hood and Social Finance Inc. (SoFi).

Mike Viges, a 34-year-old New Yorker with a FinTech background, said he started using the Robinhood app every day since the beginning of the pandemic.

“I’m definitely a little addicted. There’s something like” Look first in the morning “and you’re doing impulsive deals,” he said.

The influx of new investors surged during the lockdown of COVID-19, and enthusiastic trading of small caps such as GameStop and AMC Entertainment (NYSE :) pushed market volume to record levels, January 27. It peaked at 24.48 billion shares traded in. Refinitiv data and analysts.

Mr. Bigesse said that day he sold the AMC shares he bought in December with a five-fold return. Most recently, after making its market debut last week, I bought a quarter of the Megacap Coinbase shares.

At Schwab, customers opened 3.2 million new accounts in the first quarter. This is more than the number opened in 2020, excluding accounts acquired through mergers and acquisitions.

At the brokerage firm Trade Zero America, new accounts this year have increased by 300% to 400% overall last year, said co-founder Dan Pipitone.

“Although volume is steadily declining, the pace at which people onboard and open accounts hasn’t really slowed that much,” he said.

Ivo Welch, a professor of finance at UCLA’s Anderson Graduate School of Business, says that transaction costs for small investors have dropped significantly, allowing almost anyone to have an intermediary account, even for entertainment purposes. ..

“There are few other cheap thrills or gambling with very high odds. It’s certainly much better than the lottery or Las Vegas,” he said.

Retailers have a strong appetite, even as the frenzy of stock purchases cools Retailers have a strong appetite, even as the frenzy of stock purchases cools

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