It is a balloon, according to a survey conducted by retail investors. And they don’t want to miss it.
An E * Trade Financial survey found that about three quarters of retail investors consider the market to be “complete or somewhat” in a bubble, a 3 percentage point increase over the previous quarterly survey. At the same time, bullish sentiment rose to pre-pandemic levels of 61%.
“Optimism has grown as the market has hit all-time highs, vaccines have risen, incentives have continued and earnings estimates are high,” said Mike Loewengart, general manager of the company’s investment strategy.
Stocks have been in tears for more than a year, and bubble warnings have appeared most of the time. But the latest stage has extended ratings to the levels last seen in the dot-com era, and as yields have risen, the choir has grown so much that retail investors have taken note. But most ignore it – just as they did while the S&P 500 rose 83 percent of the pandemic’s lows – betting that money must be made as long as government spending and the Federal Reserve keep politics free.
They constantly bought when the professionals evaded and made early bets on shares that will benefit the most from a return to normal economic activity. In the last 12 months, they have shown an average of $ 1.2 billion a day in stocks, according to VandaTrack data.
Source: E * Trade Financial
In some circles, the relentless buying by individual investors raises concerns that the group is ready to withdraw, creating a risk for the wider market. Equity allocation for U.S. households probably increased to 40% in April, surpassing the dot-com peak and reaching its highest level since the early 1950s, according to an estimate by JPMorgan Chase & Co.
At various times in the last year, the retail frenzy has raised concerns from professional investors who have warned that their involvement, as in the early 2000s, means too much euphoria. But they haven’t escaped yet. At Bank of America Corp., individuals were net buyers of shares for the sixth consecutive week, according to the company’s latest customer fund data. This contrasts with professional investors who have taken advantage of recent gains to unload holdings.
E * Trade surveyed nearly 1,000 retail investors who manage at least $ 10,000 in their online brokerage accounts. The survey also showed that almost half believe the economy is in better shape, up 15 percentage points from the previous quarter. And while concerns about virus risks have eased amid the recent launch of vaccines, concerns about market volatility have risen and are now ranked as the main risk for investor portfolios, according to the survey.
Whether or not retail investors continue to play a major role in the markets will depend on what happens when there is a significant withdrawal, according to Max Gokhman, head of asset allocation at the Pacific Life Fund. councilors.
“What happens when there is no new fuel for this rocket on the moon? A lot of the diamond-clad hands might realize that they overpaid for quality cubic zirconia, ”he said, referring to a popular phrase that describes gump bullish. “If they stay in the markets after that, it will determine the long-term effect of retail.”