Small Investors Look Reluctant To Buy The Latest Stock Market Dip

Small Investors Look Reluctant To Buy The Latest Stock Market Dip
Andrew Rummer

over 2 years ago1 min

Mentioned in story

After the S&P 500 closed in the red in six of the seven trading sessions through Tuesday, retail investors have so far proven reluctant to step in and buy the dip. 

As the green circles on the chart above show, in recent months smaller investors have rushed to buy US stocks at the slightest sign of a pull-back. But while there's been some increase in retail buying over the past week, purchases are well down compared to similar sell-offs in May, June, July, and August. 

Over the five days through Tuesday, data from VandaTrack shows retail investors pushed $657 million into exchange-traded funds (ETFs) focused on US stocks. The chart below shows how that compares to similar market dips over the summer. 

Retail buying of stock market dips.

Retail enthusiasm for stocks has been one of the defining features of markets since the coronavirus pandemic hit early last year. If smaller investors are no longer feeling confident enough to buy any dips in stocks, it would remove one of the market’s key props.

“This diminishing appetite to support the equity rally raises the odds of a larger sell-off if institutional investors continue to sell,” VandaTrack reckons. 

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