Retail Investors Give The Tech Sell-Off A Surprisingly Lukewarm Welcome

Retail Investors Give The Tech Sell-Off A Surprisingly Lukewarm Welcome
Andrew Rummer

about 2 years ago1 min

Tech stocks have had a tricky start to the year, with the Nasdaq 100 Index dropping 6.8% so far in January. But while such a sell-off would normally attract a wave of dip buying from smaller investors, their enthusiasm currently appears on the wane. 

The Nasdaq 100 fell 2.6% on Tuesday as US markets reopened after Martin Luther King Day. That sent the ProShares UltraPro QQQ exchange traded fund (ticker: TQQQ), which tracks the Nasdaq 100 with 3x leverage, down a massive 7.2%.  

As the chart above from data provider VandaTrack shows, a tumble of that magnitude in 2021 would have prompted a wave of retail traders “buying the dip” in the ProShares ETF. But while small investors did indeed purchase about $48 million worth of TQQQ on Tuesday, that’s barely half the average that would have greeted a similar drop last year.

“This could be the first sign that retail fatigue or capitulation is setting in, at least in the tech space,” VandaTrack reckons. 

As smaller investors tire of tech, they’re learning to love financial stocks  – which stand to benefit as interest rates rise. Retail investors bought 2.5 times more financial stocks than average over the past five days, according to VandaTrack. As inflation booms and central banks start thinking about raising interest rates to tackle it, we may see more investors abandon exciting sectors in favor of the relative security of financial stocks.

Finimize

BECOME A SMARTER INVESTOR

All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

Finimize
© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG