Retail investors hate the stock market right now, and they've sold all of the stocks they bought during the pandemic-era trading boom after what has been a difficult 18-month stretch for equities.
According to an analysis from Goldman Sachs, retail trading trends in NASDAQ single stocks reached a new milestone as investors throw in the towel and get back what they can from the high-flying tech stocks that have since cratered after an eye-popping surge during the pandemic.
"After a buying frenzy during the pandemic, we estimate retail investors started to sell stocks in February 2022. Selling continued until they sold all of their pandemic-acquired NASDAQ single stocks as of November 2022. The selling intensified in early 2023, and we estimate retail investors have now sold more than twice what they acquired during the pandemic," Goldman Sachs analyst John Marshall said in a Monday note.
The stimulus-fueled trading frenzy among individual investors took over the stock market in 2020 and 2021, with everything from meme-stocks to cryptocurrencies soaring in value.
And while some of the retail selling could be attributed to an ongoing shift away from individual stock ownership and instead towards ETF ownership, that trend doesn't explain away all of the selling.
"Year-to-date, ETF inflows have slowed. Now, individuals are not only selling single stocks, but they have slowed their buying of equity ETFs," Marshall said.
In other words, retail investors have "rage sold out of the stock market," Fundstrat's Tom Lee said, referring to the data. "This shows that cumulative current flows into equities are below what they were in 2019... and this occurred when retail equity investors literally exited the market."
The selling comes at a time when stocks have largely moved sideways over the past year on an absolute basis, and as retail investors pour more and more cash into money market funds, which hit a record of nearly $2 trillion this year.
According to Lee, that sets the stock market up for more upside because few investors are positioned for a continued rally. And as more and more investors change their mind, they'll chase the rally and provide further buying pressure to push stock prices up.
[link] [comments] https://www.reddit.com/r/stocks/comments/137ynib/retail_investors_have_rage_sold_out_of_the_stock/
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