Retail investors are individual, non-professional investors who buy and sell securities for personal accounts, typically through brokerage firms or trading platforms. They differ from institutional investors, such as hedge funds, pension funds, and mutual funds, which manage large pools of capital on behalf of clients or organizations.
Retail investors generally invest in:
Stocks, ETFs, mutual funds
Bonds, options, and commodities
Cryptocurrencies and alternative assets
They usually trade in smaller amounts than institutional investors and often rely on publicly available information rather than proprietary research.
Retail investor sentiment score reached ~4 on Tuesday, the highest level on record and ~1 pt higher than the peak of the meme mania in 2021, according to JPM
Retail investors purchased $12 billion in US equities over the last week and broke another record
Mom-and-pop investors net buying of US stocks jumped to the highest in 2 years.
This level of retail optimish does make me nervous
Wow very cool insights. I love details on retail sentiment and to a smaller degree also how funds are positioning themselves. Both is very interesting to see.
This might signal to us that a top is near.
How often can we get this data? For example could we immediately know once retail money stops coming in? (Once everyone is already in the market and there are no more buyers coming this could be the top)
In order to see if this thesis is valid or not we would need to develop a good comprehensive overview of money flows overall so we can put everything into perspective (not only retail etf flows and leveraged funds but all funds, ETFs etc. to develop an as complete as possible picture)
I suggest you start creating a task for that with a relatively high priority
My current best guess is that we are at the whim of what is shared on X by other people that has access to these reports and data.
We could search for what is shared constantely there, but I haver never seen this type of data on a free database, but I will search for it.
Thats why creating a complete picture will be difficult in my opinion, but I will create the task for it, and start working on what possible here.
Where do you see retail investor sentiment as of now? Is it already quite low or could there be a long sell off and panic from retail investors coming?
I don’t find any new data being shared on this, not even on X.
The market have barely decline, don’t know how much bad sentiment this can create.
At the same time I heard common retail stocks like palantir, app loving, Hims, and these type did experience a significant correction.
Will be on the lookout for new data on this, and share here.
Apparently Commitment of traders report (COT) is one of the free reports (have not look that deep into yet) that can give some information into positioning in futures open interests, but data will be available until next week for this week.
Retail Investors could have started to get at extreme bearish sentiment
Extremes can always get more extreme or continue for some time without proper catalysts, but this could be starting to signal that a bounce could be possible IF there is stabilization in all the uncertainty currently
Goldman Sachs:
AAII Bear Index is at an extreme level. Last time it was registering this extreme it marked the precise low October of 2022.
Retail Investors Keep Buying the Dip According to Bank of America
This kind of data, along with my previous post, with similar rhetoric, makes me think that despite supposedly very bad retail sentiment in some surveys, there has not been true capitulation by retail yet.
BoA says that their private clients (retail) were buyers for a 16th straight week last week w/the 4th largest inflow on record, “the longest start-of-year buying streak in our data since ’08.”
8 of 11 sectors have seen net single stock buying with just Staples, Cons Discr, & Tech seeing outflows, with the last seeing by far the most net outflows.
According to JPM: Retail Investors bought ETFs and Stocks at the fastest pace in history last month
Similar to my last post I thought there has not been true capitulation by retail yet, IMO until we don’t see this come down significantly, no true bottom yet.
Interesting I saw just this posted from yesterday: Retail investors bought nearly $5 blllion in stocks and ETFs yesterday - the highest level in a decade - JPMAM
I think everyone still thinks this is just a normal dip/correction
