It’s Currently Taking A Large Slide In Stocks To Turn Retail Investors Into Dip Buyers

It’s Currently Taking A Large Slide In Stocks To Turn Retail Investors Into Dip Buyers
Andrew Rummer

over 2 years ago1 min

Mentioned in story

The stock market currently needs to fall significantly before smaller investors get interested enough to go bargain hunting.

Since September, retail investors have flocked to buy when the S&P 500 slides by more than 1% in a day, according to data from research firm VandaTrack. Yet they show little appetite for stocks when the market posts smaller declines.

The data “suggests that retail investors are not particularly thrilled about stocks right now, and only feel tempted to buy dips if there is a substantial discount,” VandaTrack argues. 

That seems reasonable, but there might be another explanation: as smaller investors have become more used to down days since the S&P 500’s early September peak, perhaps it takes a day of deep red – with all the associated hysterical headlines and social media posts – to get them reaching for their Robinhood accounts.

With futures on the S&P 500 down 1.2% as of 7:45am in New York on Wednesday, perhaps we’ll see some retail dip buying when US markets open today.

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