Small Investors “Buy The Dip” In Stocks

Small Investors “Buy The Dip” In Stocks
Andrew Rummer

almost 3 years ago1 min

Mentioned in story

As some of the most popular US tech stocks suffer a torrid time, pushing the Nasdaq 100 Index lower for three straight weeks, plenty of smaller investors are rushing to buy. 

So-called retail investors bought $6.6 billion of US stocks on average in each of those three painful weeks, according to data from VandaTrack. That’s a 40% increase on 2020 and nearly nine times the rate of purchases in 2019, before the coronavirus pandemic. 

According to VandaTrack, the most popular stocks to buy were iPhone maker Apple and Chinese electric-vehicle producer NIO – both of which have tumbled in recent weeks. 

It appears plenty of smaller investors believe the current weakness in tech – driven by rising bond yields reducing the appeal of future earnings growth – will prove temporary. 

With $1,400 stimulus checks making their way to millions of Americans in coming weeks, we might see even more retail money flowing into the markets. 

The question many investors are asking is whether this sustained buying from the smallest traders is a bullish sign that stocks can rise to new records – or a bearish sign that inexperienced investors have become over excited. We’ll have to wait and see.

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