Retail Investors Buy The Omicron Market Dip

Retail Investors Buy The Omicron Market Dip
Andrew Rummer

about 2 years ago1 min

Mentioned in story

Retail investors’ purchases of US stocks hit a fresh record on Tuesday as they stepped in to buy the latest coronavirus-inspired market dip.

The S&P 500 fell nearly 3% in the three trading days following the Thanksgiving holiday on news that the latest coronavirus variant – dubbed Omicron – had a large number of mutations that could make existing vaccines less effective. But the chart above shows how the sea of red inspired little fear among smaller investors: they bought $2.1 billion of US stocks on Friday and another $2.2 billion on Tuesday.

Again and again since the pandemic first spooked markets in March 2020, retail investors have jumped in to buy stocks whenever they’ve fallen. And, mostly, that bravado has been heartily rewarded as markets rebounded to set fresh all-time highs. As the months have gone by, however, an intriguing trend has developed. The chart below suggests that smaller investors are trading less (the yellow line) but those remaining in the markets are buying rather than selling (the blue line).

Retail trading chart

If those bullish retail investors continue to step in at any hint of red in stocks, it should help limit any losses as we head towards the conclusion of 2021. 

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