The Pros Get Their Own Back On Small Investors

The Pros Get Their Own Back On Small Investors
Andrew Rummer

about 2 years ago1 min

Mentioned in story

After the Covid pandemic helped spur huge gains in stocks most popular with smaller retail investors, the past year has seen them come back to earth with a bump. 

The chart above plots Goldman Sachs’s index of retail favorites divided by the bank’s index of favored stocks among professional mutual fund managers. A rising line shows retail investors’ favorites beating the pros’ – and a declining line shows the pros’ picks winning. 

After a fantastic run for small investors in 2020 and the early weeks of 2021, the trend since then has been firmly in favor of boring old mutual funds. 

Coincidentally or not, the February 2021 peak coincided with the heights of GameStop mania. History might well judge that episode as the high water mark of retail investors’ power.

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