Bullish options trading has been declining over the last month as retail investors focus their attention on the economic reopening, Deutsche Bank finds

NYSE Wall Street coronavirus
  • Bullish options activity from retail investors has started to decline in recent weeks, Deutsche Bank strategists said.
  • The decline in options trading has coincided with an uptick in mobility indicators, restaurant bookings, and air travel.
  • It’s a sign that the retail-trading frenzy may be dying down as the economy re-opens.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

After heightened activity in 2020, the volume of bullish options trading has fallen since late January in a sign that retail investors are starting shift their attention, according to a team of strategists from Deutsche Bank.

In a Friday note, the strategists said that the size of call options trades that have risen and now fallen are small, indicating that they’re driven by retail investors. This comes as Wall Street begins to question whether the stay-at-home retail trading frenzy that was seen most prominently during the GameStop short squeeze will die down as the economy reopens and investors spend their money and time on other activities.

Deutsche Bank data also showed that mobility indicators, restaurant bookings, and air passenger traffic have all risen significantly in recent weeks as retail call volumes decline.

“This jives with our view that as retail investors have other things to do, the attention focused on the equity market will start to fade,” the firm said.

The options activity decline has also dragged down a basket of stocks with the highest call exposures that Deutsche Bank tracks. The group of stocks soared 160% in just over three months since November. However since mid-February, the basket has tumbled 24%, compared to the average stock in the S&P 500, which is up slightly in the same time period.

Although a lot of firms predicted that retail investors would put a large chunk of their stimulus money into stocks, Deutsche Bank found that two-thirds of those payments have already been distributed, implying that the impact of stimulus should start to fade in the market.

The analysts also noted that as these call volumes decline, stock market volatility may also trend lower. This could prompt systematic investors to raise already elevated allocations to stocks to record high levels, according to the strategists.

options activity

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Many Americans are turning to Reddit for stock tips after Wall Street Bets captivated markets during the GameStop saga

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Reddit logo.

Among the many aftereffects of the GameStop saga earlier this year is an increased interest in Reddit as a source of stock picking advice and investing tips, a recent survey shows.

A survey by Travis Credit Union conducted between February 15 to March 2 among 2,052 Americans revealed that 70% who said they invest look to Reddit for stock tips.

“Today, there’s a lot of positive energy around the stock market as a new generation gets involved through new technology,” said Andy Kerns, Creative Director at Digital Third Coast, which managed the survey for Travis Credit Union.

As for their favorite trading platform, 39% said it was Robinhood, followed by E-Trade at 19%, WeBull at 12%, and Fidelity at 10%.

A majority said they check their accounts daily, while 32% check theirs weekly.

Among all the respondents, 1,275, or 62%, said they have invested only recently. Most said they used what they called “extra spending money,” though one in four surveyed said they invested less than $500.

The rapid rise of retail investors has been a powerful force in the stock market, enabled by a range of factors including commission-free trading, distribution of government stimulus checks, and heightened pandemic boredom as many people continue to work from home.

While more than 57% who were surveyed think the boom in retail trading was “great,” around 10% found it “problematic.”

The retail investing trend hit a fever pitch in January, when an army of retail traders coordinating on Reddit’s Wall Street Bets forum sparred with short-focused hedge funds and pushed their favorite stocks higher.

Read more: Buy these 15 stocks that are set to surge as companies invest their near-record amounts of cash on massive infrastructure projects and technologies, Jefferies says

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Over 50% of US investors think the stock market is rigged against individuals, a Bankrate survey finds

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A woman walks past the New York Stock Exchange (NYSE) at Wall Street on November 16, 2020 in New York City.

  • 56% of investors surveyed by Bankrate say they strongly agree or somewhat agree that the stock market is rigged against individual investors.
  • Meanwhile, 41% of Americans surveyed who don’t have any money invested in the stock market also agreed with the notion.
  • The survey sheds a light on recent retail investor sentiment following the Reddit-driven trading surge in January.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Over half of US investors think the stock market is rigged against individuals, according to a survey of 2,525 Americans from Bankrate.

In a February study, 56% of investors surveyed and 41% of non-investors either “strongly agreed” or “somewhat agreed” with the statement: “The stock market is rigged against individual investors.”

Overall, 48% of American adults surveyed either somewhat or strongly agreed with the statement. More than 18% strongly agreed with the statement, and roughly 29% somewhat agreed. Meanwhile only 13% disagreed with the statement, with the rest remaining neutral.

The results come after the Reddit-driven market frenzy in January that saw Robinhood halt trading of many “meme stocks” stocks, prompting retail investors to argue they’re at a disadvantage.

The Bankrate survey revealed that more than 39 percent of American adults had no money invested in the stock market either before the pandemic or currently.

Other findings include:

  • 20% of investors said they’re investing more now than before the pandemic, with younger investors adding more than older cohorts.
  • 39% of American adults had no money invested in the stock market before the pandemic or currently.
  • Investors who identified as Reddit users were more than twice as likely to invest more now than less now compared to pre-pandemic.

The Bankrate study was conducted via online interview by YouGov Plc from Feb 24-26 2021. 2,525 adults were surveyed and data was intended to be representative of all US adults.

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More GameStop-like short squeezes could be up ahead in the ‘fragile’ stock market, says a market research veteran

GameStop Clerk
  • The GameStop short-squeeze that shook markets in January probably won’t be the last of its kind, according to Wellington’s Owen Lamont.

The GameStop short-squeeze that shook markets in January probably won’t be the last of its kind, according to Wellington Management’s Owen Lamont. 

The market researcher said he anticipates more short squeezes in the future in illiquid names and “little corners of the market,” on an episode of the Exchanges at Goldman Sachs podcast published Wednesday.

“It seems to me that we’re in a market where prices are moving a lot. It’s probably not that horrible if a couple stocks every now and then go crazy. But I’m more concerned about the whole system being fragile,” he said. 

The price of GameStop’s stock surged in January after investors rapidly purchased shares of the highly-shorted video game retailer, causing short sellers to close their positions and drive the stock’s price up even higher. Lamont said this squeeze was different from ones throughout history, like Volkswagen in 2008, because GameStop’s price was driven up by “many small traders,” as opposed to a few large players. 

“The events of January just made it seem like our system is more fragile,” Lamont said on the podcast. 

He emphasized that short-squeezes are rare in well-functioning, liquid markets, and there shouldn’t be a scenario in which prices are moving so much in response to sentiment changes. 

The long-time academic researcher explained the concept of “noise trader risk,” where traders make market prices move round but rational traders who don’t want to bear the risk exit. 

“In that story, volatility begets volatility,” Lamont said. “And the crazy prices in volatility are a self-reinforcing cycle. So, I’m not sure whether it’s the illiquidity that’s causing the volatility today, or the volatility that’s causing the illiquidity. But somehow, we’re in a situation where market prices, at least in a handful of names, seem out of whack.”

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Legendary investor Jeremy Grantham says the stock-market bubble could burst before May in a new interview. Here are the 16 best quotes.

jeremy grantham
Jeremy Grantham.

  • Jeremy Grantham said the stock-market bubble would likely deflate before May.
  • The GMO cofounder also criticized SPACs and cheered electric vehicles.
  • Here are Grantham’s 16 best quotes from his “Invest Like the Best” interview.
  • Visit the Business section of Insider for more stories.

Retail investors piling into stocks have fueled a historic bubble that will probably burst before May, the veteran investor Jeremy Grantham said on the “Invest Like the Best” podcast this week.

The GMO cofounder and chief investment strategist also discussed how the bubble would deflate, slammed SPACs, shared some of the insults he’d received for criticizing bitcoin, and predicted that electric vehicles would revolutionize the auto industry.

Here are Grantham’s 16 best quotes from the interview, lightly edited and condensed for clarity:

1. “This bubble is more impressive even than 2000, which was the champion. About 80% of the value measures have this one higher. We’ll be rather lucky to have this bubble last until May.”

2. “When the financial headlines migrate to the front page, when the evening news mentions the market or some crazy behavior of GameStop, Tesla, you know you’re getting very warm.” – outlining some of the signs of a bubble about to burst.

3. “This is not primarily an institutional bubble; this is an individual bubble. The individuals are absolutely crazy. They have expanded their share of the market trading, and they have really entered into the market with great enthusiasm for the first time in decades.”

4. “I have to confess that I find it all exhilarating. I’m only concerned somewhat for the relatively new investors who get drawn into these things and then find out the hard way. I sympathize completely with these people out there enjoying this bubble, but they’ve always ended very badly, and I have no doubt this one will too.”

5. “I’m not optimistic that anyone caught up in this wants to hear my advice and consequently would act on it. When you get into that excitement, mini frenzy, pretty hard to stop you with dry historical stories. ‘That was then, this is now, baby! Get aboard. You don’t understand. You dinosaurs don’t get it.’ Well, the trouble is we do get it, but there is no way I can persuade them. Just tread out the regular story, and one out of a hundred might listen. I will sympathize with them when they’re cleaned out.”

6. “We’re a crazy marketplace full of irrational human beings who behave themselves 80% of the time and then 20% of the time totally freak out one way or the other.”

Read more: The world’s top investment firms pay Rob Arnott for advice. He shares 2 investing ideas that could go down as ‘the trade of the 2020s’ as the world bounces back from COVID-19.

7. “They don’t want to look foolish with their neighbor, and I concede that seeing your neighbor get rich is about as irritating as anything that life has to offer.” – discussing how retail investors get caught up in speculation.

8. “The market tops out when the last bull has put his last money in. There is a moment of maximum enthusiasm, and the next day there’s plenty of enthusiasm but less than the previous day. So the buying pressure is released a little bit, like the famous water jets under the ping-pong balls. You turn the faucet down a little bit and the ball is still way up in the air, but it’s just dropped a couple of inches. It’s that process of slowly lowering the pressure, and the overpriced ping-pong ball slowly descends until it hits the proper level.”

9. “Rapidly rising hostility to bears is a very good, very late signal that the bubble is way advanced. I gave my fairly bland opinion about bitcoin, just that it was faith-based, there’s nothing new or shocking about that. But armies of individual fanatics descended on the comments. There was no insult that was not good enough for me, not just senility and old age and complete ignorance about bitcoin. I got three insults back about my big ears which I hadn’t had since I was 7 years old.”

10. “SPACs are terribly speculative, undesirable, unnecessary instruments. They’re really a license to rip investors off. It’s a testimonial to the sloppiness and slow-moving nature of the SEC that they haven’t banned these things long ago.”

11. “QuantumScape went from $10 to $130, where it was worth more than General Motors or Panasonic. That compares pretty well in scale with anything around in 1929 or 2000. To have a company that has no earnings or sales for four years, brilliant or not, and to look out that far into the future and make it worth more than General Motors, that’s a pretty good demonstration of something. And it was wonderfully ironic, because by then I’d already been sounding off about the undesirableness of SPACs. And there I am with far and away, for a second or two, my biggest investment ever.” – discussing his 53-fold gain on QuantumScape after a SPAC acquired the solid-state-battery company.

12. “I don’t believe the banks are nearly as important as they would love us to believe. They managed to fake the majority of people in ’09 into thinking they were so desperately important that if we didn’t bail them all out, if we let a single banker go out of business, we’d be deep in 1932, in the Great Depression.”

13. “The baby bust is going to be worse than anybody thinks, way off the scale of anything we’ve ever talked about. It’s going to change the world.” – emphasizing the effects of declining birth rates in many of the world’s largest economies.

14. “Electric cars will be cheaper to build. They’re already cheaper to run and cheaper to operate by far, and safer and better to drive. We have killed gasoline and diesel cars.”

15. “We’re compounding the wealth of society much more slowly. If you’re not in the game, just think how terrible it is: You pay twice as much for a house, the stock market is twice the price it used to be, the farm up the road if you’re in the countryside is twice the price it used to be. It’s glorious for the people who own a lot of assets, for old fogies who are selling their assets, that’s terrific. But everybody else, and particularly the young, it’s a pain in the ass.”

16. “For heaven’s sake, do the little that you can do to prepare for the future, which is to have a great infrastructure and a great educational system. Reality is the quality and quantity of your workforce. How motivated, how happy, how well-organized they are, how well-trained they are, and how well-retrained they are, if necessary, plus the quantity and quality of your assets per worker. That’s real life.”

Read the original article on Business Insider

Legendary investor Jeremy Grantham warns the stock-market bubble could burst before May in a new interview. Here are the 16 best quotes.

jeremy grantham
Jeremy Grantham.

  • Jeremy Grantham warned the stock-market bubble will likely deflate before May.
  • The GMO cofounder also criticized SPACs and cheered electric vehicles.
  • Here are Grantham’s 16 best quotes from his “Invest Like The Best” interview.
  • Visit the Business section of Insider for more stories.

Retail investors piling into stocks have fueled a historic bubble that will probably burst before May, veteran investor Jeremy Grantham warned on the “Invest Like The Best” podcast this week.

The GMO cofounder and chief investment strategist also discussed how the bubble will deflate, slammed SPACs, shared some of the insults he received for criticizing bitcoin, and predicted electric vehicles will revolutionize the auto industry.

Here are Grantham’s 16 best quotes from the interview, lightly edited and condensed for clarity:

1. “This bubble is more impressive even than 2000, which was the champion. About 80% of the value measures have this one higher. We’ll be rather lucky to have this bubble last until May.”

2. “When the financial headlines migrate to the front page, when the evening news mentions the market or some crazy behavior of GameStop, Tesla, you know you’re getting very warm.” – outlining some of the signs of a bubble about to burst.

3. “This is not primarily an institutional bubble, this is an individual bubble. The individuals are absolutely crazy. They have expanded their share of the market trading, and they have really entered into the market with great enthusiasm for the first time in decades.”

4. “I have to confess that I find it all exhilarating. I’m only concerned somewhat for the relatively new investors who get drawn into these things and then find out the hard way. I sympathize completely with these people out there enjoying this bubble, but they’ve always ended very badly and I have no doubt this one will too.”

5. “I’m not optimistic that anyone caught up in this wants to hear my advice, and consequently would act on it. When you get into that excitement, mini frenzy, pretty hard to stop you with dry historical stories. ‘That was then, this is now baby! Get aboard, you don’t understand. You dinosaurs don’t get it.’ Well, the trouble is, we do get it, but there is no way I can persuade them. Just tread out the regular story, and one out of a hundred might listen. I will sympathize with them when they’re cleaned out.”

6. “We’re a crazy marketplace full of irrational human beings who behave themselves 80% of the time, and then 20% of the time, totally freak out one way or the other.”

7. “They don’t want to look foolish with their neighbor, and I concede that seeing your neighbor get rich is about as irritating as anything that life has to offer.” – discussing how retail investors get caught up in speculation.

8. “The market tops out when the last bull has put his last money in. There is a moment of maximum enthusiasm, and the next day there’s plenty of enthusiasm but less than the previous day. So the buying pressure is released a little bit, like the famous water jets under the ping-pong balls. You turn the faucet down a little bit and the ball is still way up in the air, but it’s just dropped a couple of inches. It’s that process of slowly lowering the pressure and the overpriced ping-pong ball slowly descends until it hits the proper level.”

9. “Rapidly rising hostility to bears is a very good, very late signal that the bubble is way advanced. I gave my fairly bland opinion about bitcoin, just that it was faith-based, there’s nothing new or shocking about that. But armies of individual fanatics descended on the comments. There was no insult that was not good enough for me, not just senility and old age and complete ignorance about bitcoin. I got three insults back about my big ears which I hadn’t had since I was 7-years-old.”

10. “SPACs are terribly speculative, undesirable, unnecessary instruments. They’re really a license to rip investors off. It’s a testimonial to the sloppiness and slow-moving nature of the SEC that they haven’t banned these things long ago.”

11. “QuantumScape went from $10 to $130, where it was worth more than General Motors or Panasonic. That compares pretty well in scale with anything around in 1929 or 2000. To have a company that has no earnings, or sales, for four years, brilliant or not, and to look out that far into the future and make it worth more than General Motors, that’s a pretty good demonstration of something. And it was wonderfully ironic, because by then I’d already been sounding off about the undesirableness of SPACs. And there I am, with far and away, for a second or two, my biggest investment ever.” – discussing his 53-fold gain on QuantumScape after a SPAC acquired the solid-state battery company.

12. “I don’t believe the banks are nearly as important as they would love us to believe. They managed to fake the majority of people in ’09 into thinking they were so desperately important that if we didn’t bail them all out, if we let a single banker go out of business, we’d be deep in 1932, in the Great Depression.”

13. “The baby bust is going to be worse than anybody thinks, way off the scale of anything we’ve ever talked about. It’s going to change the world.” – emphasizing the impacts of declining birth rates in many of the world’s largest economies.

14. “Electric cars will be cheaper to build. They’re already cheaper to run and cheaper to operate by far, and safer and better to drive. We have killed gasoline and diesel cars.”

15. “We’re compounding the wealth of society much more slowly. If you’re not in the game, just think how terrible it is: You pay twice as much for a house, the stock market is twice the price it used to be, the farm up the road if you’re in the countryside is twice the price it used to be. It’s glorious for the people who own a lot of assets, for old fogies who are selling their assets, that’s terrific. But everybody else, and particularly the young, it’s a pain in the ass.”

16. “For heaven’s sake, do the little that you can do to prepare for the future, which is to have a great infrastructure and a great educational system. Reality is the quality and quantity of your workforce. How motivated, how happy, how well-organized they are, how well-trained they are, and how well-retrained they are if necessary, plus the quantity and quality of your assets per worker. That’s real life.”

Read the original article on Business Insider

The next stimulus will drive another surge of retail investing in the stock market, Bank of America says

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Robinhood is hugely popular among day traders, putting it at the center of the GameStop frenzy

  • The next round of stimulus aid will drive another surge of retail investing, Bank of America said.
  • BofA data shows the last two spikes in trading app downloads coincided with the receipt of stimulus checks. 
  • A more broad-based stimulus will lead to a higher uptick of retail-investing, added BofA.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Retail investors have poured into the stock market in the last year, lured by comission-free trading, work from home conditions, stimulus checks, and high savings rates. Now, Bank of America says that it is expecting the next round of federal stimulus aid to drive another surge in retail investing.

“We expect another uptick in retail activity with another round of stimulus, though the level will likely depend on the type of stimulus (broad based or targeted), the market backdrop at the time, as well as any potential regulatory changes discussed over the coming weeks,” a team of BofA analysts said in a recent note. 

The firm found that the last two spikes in trading app downloads coincided with the receipt of stimulus checks. However, in both cases, there were extreme market moves (April 2020) and individual stock moves (January 2021) that helped draw investors.

If the next round of stimulus is broad based, BofA expects a higher level of retail activity, particularly as unemployment improves and many Americans are in better financial positions. President Joe Biden’s proposed $1.9 trillion stimulus plan includes $1,400 direct payments for individuals making up to $75,000 a year. 

Read more: Raymond James says buy these 12 ‘center of the storm’ stocks that are set to rebound as the economy reopens – including 6 that can outperform the S&P 500 in the coming months

While BofA expects retail engagement to moderate throughout 2021 following the stimulus as people spend more time and money away from home, the bank still expects structurally higher levels of retail activity versus 2019 because of zero commissions, new entrants, and advances in technology. 

In addition to a stimulus-boost, Bank of America’s data shows that the recent surge in retail trading has been led by young investors and social media.

Throughout 2020 and January 2021, brokerage firms E-Trade and TD Ameritrade saw a rising percentage of users aged 18-34, BofA said.

“It’s not just retail investors that may increasingly be a force in markets, its young retail investors,” BofA noted. “And while traditional news outlets did see a usage boost from the January surge in certain stocks, the boost was far bigger for Reddit, which tells you something about how these younger investors are obtaining views and information.” 

Bank of America found that Robinhood daily average users reached 8 million, up from an average of 4.5 million, at the height of the GameStop market-mania in late January. At the same time, conversations on the WallStreetBets Reddit forum climbed dramatically.

While Robinhood usage has come down from its January highs, it still remains elevated relative to before the GameStop frenzy, indicating that retail activity is here to stay, BofA added.

Screen Shot 2021 02 16 at 10.48.24 AM
savings rate stimulus stocks bofa chart

Read more: Biden’s ESG push is a huge opportunity for asset managers. Firms like BlackRock and Fidelity are making hires, boosting tech tools, and launching new products to capture it.

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‘Big Short’ investor Michael Burry blasts trading apps, calls Robinhood a ‘dangerous casino’

Dr. Michael Burry
The “Big Short” investor Michael Burry.

  • The “Big Short” investor Michael Burry criticized zero-commission trading apps on Tuesday.
  • Some sell order flows to Wall Street and encourage risky, short-term bets, Burry said.
  • Burry also blasted Robinhood’s gamification of investing, calling its app a “dangerous casino.”
  • Visit Business Insider’s homepage for more stories.

Michael Burry on Tuesday dismissed the idea that Robinhood and other trading apps were empowering retail investors and disrupting the financial industry.

“The #mainstreetrevolution is a myth,” the Scion Asset Management boss tweeted. “Zero commissions and gamified apps were designed to feed flows to the two most influential WS trading houses.”

Burry, best known for his starring role in Michael Lewis’ book “The Big Short,” was referring to Robinhood and some of its peers selling their order flows to Wall Street firms such as Citadel Securities and Virtu Financial.

Read more: UBS says bitcoin is a bubble and too volatile to diversify a portfolio, unlike gold – here’s why the bank says it could end up ‘worthless’

“A few HFs got hurt,” Burry said, referring to short-selling hedge funds such as Melvin Capital losing money during the meme-stock boom in January.

“But if retail is moving toward more trading and away from fundamentals, WS owns that game,” he continued. “#Stonks by design.”

In other words, Burry’s view is that the new generation of cheap, fun, and easy-to-use trading platforms are helping Wall Street instead of upending it. Specifically, they send order flows to the likes of Citadel Securities and push people into day trading instead of long-term investing, playing to the strengths of professional operations.

Read more: Credit Suisse says to buy these 16 ‘highest-conviction’ stock picks that are set to outperform despite the market’s contrarian view

Burry singled out Robinhood in a tweet last week, sharing screenshots from the app to argue it turns investing into a casino game.

“If this looks like a serious investing app to you, and NOT a dangerous casino ‘fun for all ages,’ you’ve been #gamified,” he said.

“We designed Robinhood to be mobile-first and intuitive, with the goal of making investing feel more familiar and less daunting for an entire generation of people previously cut out of the financial system,” a Robinhood spokesperson said in a statement to Insider.

“Our focus has always been on breaking down systemic barriers to investing to help more people take control of their finances.”

Burry’s comments may carry extra weight, as he’s most likely been a major beneficiary of the retail-investing boom. Scion owned 1.7 million GameStop shares at the end of September, which it could have sold for more than $250 million during the buying frenzy last month.

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Goldman Sachs CEO says he’s concerned about stock-market euphoria stemming from retail investors

David M. Solomon, President and Co-Chief Operating Officer of Goldman Sachs, speaks during the Milken Institute Global Conference in Beverly Hills
David Solomon, CEO of Goldman Sachs, speaks during the Milken Institute Global Conference in 2017.

  • David Solomon told CNBC on Tuesday he’s concerned about euphoric activity in the stock market being driven by retail investors buying IPOs.
  • “I do think we’re at a moment in time where there’s a lot of euphoria. I personally am concerned about that. I don’t think in the long run that’s healthy,” the Goldman Sachs CEO said.
  • The euphoria was especially visible in the IPO market last week: Airbnb leapt 115% in its first day of trading, while DoorDash soared 86% following its debut. 
  • “There’s a lot of retail participation in a bunch of these IPOs,” Solomon added. “I think that’s something to watch, something to be cautious about.”
  • Visit the Business Insider homepage for more stories.

David Solomon told CNBC on Tuesday he’s concerned about euphoric activity in the stock market that is being driven by retail investors buying IPOs.

” I do think we’re at a moment in time where there’s a lot of euphoria. I personally am concerned about that. I don’t think in the long run that’s healthy. I think it will rebalance over time as it always does,” the Goldman Sachs CEO said.

Euphoria was especially visible in the IPO market last week with two high-profile IPOs. Airbnb surged 115% during its public debut, while DoorDash soared 86% as it began trading. Those offerings defied many observers’ expectations, and Solomon isn’t alone in his concerns that the market is getting too hot. The Goldman chief executive sees retail activity spiking due to technology that’s made investing and trading more accessible.

“There’s a lot of retail participation in a bunch of these IPOs,” Solomon added. “I think that’s something to watch, something to be cautious about. I think a bunch of these are great businesses, but obviously, the market at the moment is pricing in, you know, perfect execution and enormous growth for a very long period of time. And my guess is there’ll be a rebalancing of that over time for sure.”

Read more: A JPMorgan income fund manager shares 12 high-dividend stocks set to gain from a broad cyclical recovery – and unpacks the strategy he uses to beat 93% of his peers

The banking icon also said that the current stock market is appropriately looking forward and acknowledging that the pandemic will at one point be beyond us.

“There’s certainly been a meaningful recovery in the economy but there’s still a ways to go. I think we’ve replaced about 75% of the economic output that we lost when we shut down the economy in March and April and so I do think we see the light at the end of the tunnel.” 

Solomon added that the Fed’s policy actions in the beginning of the pandemic were necessary and staved off a situation that could have been much worse, but they’re not without consequences. Now, people are far out on the risk curve and that’s inflating asset prices, as seen in recent IPOs, Solomon said. 

“Cheap money has an impact,” said the CEO. 

Read the original article on Business Insider