When Retail Investing Really Took Off

Off the Charts: The Visual Says It All

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Retail stock buying was on the rise well before the GameStop frenzy, driven by free trading platforms, stimulus checks, and, perhaps, boredom amid relentless lockdowns. 

The chart below, based on U.S. retail-originated trades tracked by Vanda Research, shows that by the end of January, retail (or individual, rather than institutional) investors were pouring nine times more per day into the stock market than they were a little over a year earlier. Daily retail stock purchases (net of sales) shot up some 32% in January alone, driven by retail investors who banded together on online forums to batter hedge funds betting against GameStop and other stocks.

Retail trading began to take off even before COVID-19 was known to be spreading around the world, Vanda’s VandaTrack data shows. Robinhood, the commission-free trading platform, had been gaining in popularity, and then people were asked to stay home to halt proliferation of the virus. By April, households were in receipt of the first round of stimulus checks meant to bolster the millions of people who had lost their jobs.

The retail surge has resulted in a volatile and liquid stock market, said Eric Liu, head of research at Vanda.

“This is here to stay,” Liu said. “The investing world is like any other industry and has been opened up by technology.”