The ‘army’ of stock investors born in the time of Covid-19 is losing all its money, the ‘meme’ stock bubble is about to burst
Bloomberg reports, things are ending as quickly as they began for the army of “baby fish” investors – those brave enough to join the stock market following the crowd. This is a prominent story in capital markets during the pandemic.
This group of investors’ losses in 2022 are worse than most of the market. The amateur investors who jumped in when the blockade began have now had to pay back all of the big profits made according to Morgan Stanley statistics. The calculation is based on trades made by new investors since the beginning of 2020 and uses exchange data and master feeds to calculate the full loss and profit.
The crazy outbreak of the pandemic and the Fed’s “generous” policies are causing inflation – which central banks are racing to fight by raising interest rates – making up for what they fell first. there. The result was a “bear market” (bull market) in speculators that increased as stimulus packages began to flow in from March 2020.
“A lot of these people started trading during Covid so their only investment experience was the exhausted market, backed by the Fed. All of that changed when the Fed changed. in November but they didn’t realize it because they’d never seen a capital market that wasn’t backed by the Fed. The results were terrible,” said Matthew Tuttle, CEO of Tuttle Capital Management LLC.
Will any miracle happen? In the past, people have been predicting the deaths of retail investors born in 2020 from the moment they appeared – previous reports of this group’s demise have even been exaggerated. . Armed with a commission-free trading account, individual investors have gone to great lengths to bring their favorite stocks back to life from the brink many times over and can do so again.
However, the well-known names in this group are experiencing serious losses. AMC Entertainment has seen its stock drop 78% since June 2021. They have lost 49% of their value this year. Peloton Interactive has also now lost 90% of its value from its peak. From the beginning of 2020 to the end of November, a group of retail stocks loved by retail investors that Goldman Sachs Group tracks has doubled. This year, the basket has lost 32% in value, twice the decline of the S&P 500.
In the historic period of 2021, when home-based investors are one step into the limelight after banding together on the WallStreetBets forum to try to take on professional investors and disrupt the street order. Wall. Retail investors accounted for 24% of all stocks trading at the time, according to a calculation from Bloomberg Intelligence. Their level of influence makes Reddit blogs and Stocktwits posts a must-have for any market-gatherer.
In 2022, when about $9 trillion will be wiped out of the US capital markets. There are signals that the day’s crowd of investors is disillusioning the market. In April, retail investors piled up $14 billion in stocks, the second-lowest in any month since late 2020.
A group of individual Bank of America clients — with $3 trillion in assets, the wealth of individuals “exiting” stocks over the past four weeks has grown at its fastest pace since November.
Source: Bloomberg
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