Retail investors continue to buy lower even as portfolio values decline
- Vanda Research said retail investors have been sticking with buying lower stocks even as the value of their portfolios has deteriorated.
- The portfolio’s average decline is 32%, the largest decline since the company began tracking such data eight years ago.
- The S&P 500 pared some losses in recent sessions thanks to retail investors buying lower.
Amateur investors continue to buy a pullback in the US stock market despite a sharp decline in the value of their portfolios, and their moves have helped the S&P 500 avoid deeper losses in recent sessions, Vanda Research reported Wednesday.
The research firm said in a weekly update that net inflows into US stocks by retail investors were hovering near all-time highs, at $1.3 billion a day on average on a three-month basis.
That coincided with an average portfolio drop of 32%, the worst performance for retail investors since the company began tracking data in 2014. Stock holdings were hit hard during the downturn in the US stock market that pushed the Nasdaq Composite Index to
and the S&P 500 toward one edge.
The value of the broad index has fallen by more than $2 trillion this year, to $38.3 trillion, due in part to concerns about the U.S. economy turning into a global economy.
He fights severe inflation by raising interest rates quickly and dramatically.
“History has taught us that when faced with losses of this magnitude, it would have given the first signs of giving up, but the feeling (still) appears to be very resilient,” Vanda researchers Marco Iaccini and Giacomo Pierantoni wrote in a note. The company’s VandaTrack tool monitors retail activity in more than 9,000 stocks and ETFs in the US market.
Retail investors have helped “rescue” the S&P 500 in recent days as the quick afternoon recovery by the index appears to have been driven by retail investors engaging in a pullback strategy.
The S&P 500 fell briefly last week in a bear market, but as of Tuesday the trading session had not closed at least 20% below its recent high.
“Large inflows from retail investors towards the end of the day – without additional selling pressure from institutional investors – may have been the main force behind these sharp intraday bounces,” said Vanda.