The conventional wisdom is that you can't beat the market unless you're a professional. Someone tell that to the amateur traders on RobinHood, because they're up on the year while the average S&P500 stock is down.
The most popular stocks on RobinHood are up 1% in 2020, compared to a decline of 7% for the typical S&P constituent.
Why they're winning: Experts aren't really sure. One theory is that amateur traders are creating a self-fulfilling prophecy. Using online forums like Reddit's WallStreetBets, they drive up interest in a stock among enough people to influence its share price. Or maybe their risk tolerance has served them well in this period when many are risk averse. Or maybe they're just getting lucky.
Who are they: Individual investors now account for a fifth of stock market activity, more than double the usual level.
Why it matters: This is of course great business for companies like RobinHood and other discount brokerages. But it's also creating large amounts of risk for people who can't necessarily afford to pay the price if their luck turns. How will these investors fare in the next market crash?
The Canadian angle: RobinHood-style easy zero-fee options trading doesn't yet exist in Canada, but with the explosion of interest in the U.S. market you can be sure someone is eyeing the opportunity to be the first to market.
The most popular stocks on RobinHood are up 1% in 2020, compared to a decline of 7% for the typical S&P constituent.
Why they're winning: Experts aren't really sure. One theory is that amateur traders are creating a self-fulfilling prophecy. Using online forums like Reddit's WallStreetBets, they drive up interest in a stock among enough people to influence its share price. Or maybe their risk tolerance has served them well in this period when many are risk averse. Or maybe they're just getting lucky.
Who are they: Individual investors now account for a fifth of stock market activity, more than double the usual level.
Why it matters: This is of course great business for companies like RobinHood and other discount brokerages. But it's also creating large amounts of risk for people who can't necessarily afford to pay the price if their luck turns. How will these investors fare in the next market crash?
The Canadian angle: RobinHood-style easy zero-fee options trading doesn't yet exist in Canada, but with the explosion of interest in the U.S. market you can be sure someone is eyeing the opportunity to be the first to market.
