The average Brit plans to invest almost 20% more each month after the pandemic, extending the retail trading boom, survey finds

Above angle view of a young man using a trading app.
In addition to executing orders, brokers also provide a range of educational resources and investing advice.

  • The average Brit plans to spend 19% more each month on investing post-pandemic, a Barclays Smart Investor survey says.
  • Half of those surveyed said they will cut back on other spending to fuel their lockdown investing habits.
  • On Monday, trading app Robinhood said it had recorded lower trading levels between March and June.
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The average UK investor plans to increase their investments by 19% each month as COVID-19 restrictions in the country come to an end, extending the retail trading boom that originated during the pandemic, a Barclays Smart Investor survey found.

Younger people are set to increase their investments by an even higher number. The survey, released on Wednesday, found Gen Z investors, many of whom got hooked on investing through the rise of ‘finfluencers’ and financial social media content during the pandemic, are planning to spend an additional 36% a month on investments post-pandemic.

Across all age groups, only 6% of the roughly 2,000 people surveyed, said they planned to cut how much they invest each month. They cited the return of “normality” and the increased spending on activities such as holidays, meals out and weekend trips.

In contrast, around 50% said they would spend less on such activities to support their investing habits.

“The prediction that many will continue, or increase, the amount they invest going forward is likely driven by a rise in lockdown savings, with the ONS reporting that UK household savings are nearing an all-time high.” Clare Francis, director of Barclays Smart Investor said.

76% of those surveyed said they would maintain their investing routine and as few as 4% of those who began investing during the pandemic said they would stop once restrictions in the UK were lifted.

“Today’s findings show just how much the pandemic has changed our approach to saving and investing. As new investors flocked to the stock market last year, it was easy to assume that it was just a lockdown hobby, and that many would go back to their old spending habits when the world re-opened.” Francis said.

Retail trading apps and platforms like Robinhood and eToro, which allow individuals to invest in stocks and digital assets like crypto currencies via their phones or laptops, saw a surge in popularity throughout the pandemic.

Robinhood, which makes its stock-market debut this week, however noted a slowdown of activity on its platform in the second quarter of this year, which was when lockdown restrictions in many countries eased. In its updated prospectus published on Monday, the company said it expected revenue to drop in the three months to September 30 because of the decline in trading activity.

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Meme-stock purchases by day traders dropped 28% last week with investors ‘falling out of love’ with those shares, new data shows

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  • Purchases of meme stocks by retail investors dropped 30% – to $360 million from $500 million – last week, according to research firm Vanda.
  • Buying in meme stocks such as GameStop and AMC has fallen from a weekly peak of more than $900 million in June.
  • Virgin Galactic bucked the trend, however, ahead of the company’s planned space flight on Sunday.
  • See more stories on Insider’s business page.

Purchases of so-called meme stocks by retail investors dropped sharply last week, with Vanda Research saying the decline highlights that investors are “falling out of love” with that segment of the equity market after their spectacular rallies.

Meme-stock purchases slumped to $360 million, down from $500 million and marking a 28% drop, the research firm said in an update published Wednesday. The firm that stock prices have caught up with weaker demand.

“In most speculative trades, a few unsuccessful attempts to buy dips are followed by a rush to the exit,” wrote Giacomo Pierantoni, a research analyst at Vanda whose VandaTrack arm monitors activity in 9,000 individual stocks and ETFs in the US.

Overall weekly purchases of meme stocks, which include GameStop and AMC Entertainment, have fallen from a peak of $963 million that was notched on June 8.

GameStop, AMC, Bed Bath & Beyond and other companies still hold hefty price gains for 2021 that have been propelled by retail investors working to make money by forcing short squeezes on hedge funds that are seeking to profit from a drop in those share prices. But many of those stocks have come off their highs. AMC traded around $46 on Thursday, down from its peak above $72 on June 2.

But Vanda noted that one of the speculative baskets it monitors logged a significant increase in retail buying this week:

“Space. Retail investors have been eager to buy dips on Virgin Galactic, likely in anticipation of the next test flight on July 11th, when Richard Branson will be joining a crew of five astronauts,” said Pierantoni.

Virgin Galactic shares soared by as much as 17% ahead of Branson’s scheduled space plane flight on Sunday.

In a separate gauge of consumer interests, Bespoke Investment Group said results of its tracking on Google Trends of the term”meme stocks” suggests that interest has collapsed.

“That also applies to the individual ticker symbol of the stock that kicked off the meme stock mania: “GameStop,” and searches for AMC have fallen considerably, it said in a Thursday note.

Read more: Morningstar’s strategists say these 10 travel stocks are the best placed to soar from pent-up demand as COVID-19 restrictions lift – including 4 picks that look especially cheap

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AMC and GameStop lose momentum as the meme-stock favorites stage multi-day declines

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  • Since the start of July, AMC and GameStop have fallen 20% and 11%, respectively, as interest in the stocks has begun to wane.
  • Trading volumes in both companies have fallen, especially for AMC, which last month saw a precipitous run-up amid massive volume.
  • The top post on the Reddit forum WallStreetBets was of a 79% loss on AMC call options, which reflected a loss of more than $10,000 for the poster.
  • See more stories on Insider’s business page.

Shares in meme-stock favorites AMC Entertainment and GameStop continued multi-day falls on Wednesday as some Reddit traders took on heavy losses.

AMC ended the day at $45.07, down 9.8%. GameStop closed at $190.66, for a 4.5% loss.

Since the start of July, AMC and GameStop have fallen around 20% and 11%, respectively, as interest in the stocks has begun to wane. Trading volumes in both companies have fallen, especially for AMC, which last month saw a precipitous run-up amid massive volume.

On Tuesday, AMC enjoyed a brief pop in morning hours after CEO Adam Aron tweeted that the company would abandon plans for a share issuance in 2021, following a wave of social-media backlash. AMC shares would later erase gains and close lower on Tuesday, and continue to fall on Wednesday. The stock is down roughly 18% from Tuesday’s highs.

GameStop’s decline has been somewhat more measured. The stock has trended down since a June earnings call that, despite better-than-expected revenue numbers, disappointed some investors and analysts. Still, GameStop has not yet returned to its relatively sluggish April prices – let alone its dismal 2020 numbers, before the meme-stock frenzy kicked in.

Retail traders who had bet big on AMC using call options have taken to Reddit to post their so-called loss porn. At publication time, the top post on the forum WallStreetBets was of a 79% loss on AMC calls, losing the poster over $10,000.

But some commenters noted that the ill-fated poster’s call options did not expire until January 2022, and so could recover value should another price surge occur.

“Plenty of time,” wrote one hopeful Redditor.

Read more: GOLDMAN SACHS: Buy these 11 oil stocks as prices remain high through the next 18 months amid spiking demand and OPEC disagreements

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Two-thirds of US investors surveyed say that Elon Musk is the most influential figure in financial markets

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Elon Musk has been at the centre of 2021’s wild cryptocurrency boom.

  • 63% respondents surveyed by Investing.com said Elon Musk is the most influential personality in financial markets.
  • Half of investors say they would support policies to dial back the influence individuals like Musk have.
  • Some investors surveyed said they sold bitcoin after Musk tweeted negatively about its energy use.
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A small survey reveals that nearly two-thirds of US investors consider Elon Musk to have a large sway on financial markets.

In a June survey of 1,103 conducted online by Investing.com, 63% of respondents said the Tesla CEO is the most influential personality when it comes to financial markets. Meanwhile, 52% of investors expressed support for policies that would reduce the power of large influencers like Musk when it comes to manipulating financial markets.

Recently Musk has had a notable impact on bitcoin and other cryptocurrencies. Although it’s hard to pinpoint the reasons behind crypto movements, bitcoin often moves when Elon Musk tweets about it.

According to the survey, the billionaire’s tweets about bitcoin’s environmental impact prompted some investors to sell their coins.

38% of investors surveyed said they weren’t concerned about bitcoin’s environmental impact until Elon Musk tweeted about it. Meanwhile, 30% of those surveyed who were bitcoin investors sold bitcoin last month, with 20% attributing their sale to Musk’s comment on the environment.

However, 84% disagreed with the statement that the future of bitcoin hinges on Musk.

Investors also seemed largely split on how seriously to take Musk’s tweets. 33% consider his cryptocurrency tweets “annoying,” 27% deemed them “entertaining,” and 22% described them as “unfair,” while 28% said they’re indifferent on the matter. Respondents were able to select multiple answers for the question.

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Retail investors are on pace to sink a record $1 trillion into stocks this year – and the flows have actually accelerated over the past month, JPMorgan says

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  • Retail investors have poured nearly $500 billion into equity funds this year, JPMorgan said.
  • At the current pace, they could be on track to sink a record $1 trillion into stocks in 2021.
  • The bank also noted that retail trading has again accelerated since mid-May after cooling off following the GameStop trading saga in January.
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Retail investors could be on pace to pour a record $1 trillion into stocks in 2021, JPMorgan said.

Year-to-date, retail investors have poured approximately $485 billion into equity funds, while the retail impulse into individual stocks and options has been re-accelerating since mid-May, said a team led by global markets strategist Nikolaos Panigirtzoglou in a recent note.

A metric that measures retail buying in bullish call options rose to a record high in January at the peak of the GameStop trading frenzy. As the market cooled off, the metric subsided between February and April. Now, it has picked back up and currently sits at its highest level since January.

The record inflows come as retail investing is ultra-popular and social-media interest in “meme stocks” like AMC and BlackBerry elevates stock prices to levels that are seemingly unconnected to fundamentals.

At the end of 2020, JPMorgan estimated that retail investors would put $500 billion into stocks in all of 2021. But if the current pace of buying continues, that number could jump to $1 trillion, Panigirtzoglou said.

Read more: 2 hedge fund veterans say ‘we know how this movie ends’ as investors pile into meme stocks. They unpack their strategy for finding market outliers – which ‘made a killing’ in 2020’s volatility

Other metrics that JPMorgan uses to gauge retail investing flows also show that the state of the retail trader is stronger than ever. For example, a basket of stocks popular with US retail-trading platforms have rebounded since mid-May and have outperformed the S&P 500 since March 2020. (JPMorgan did not disclose the individual stocks in the basket.

Also, the performance of a portfolio with 50% allocated to the Nasdaq and 50% to the Russell 2000 has outperformed the S&P 500 and rallied since mid-May. JPMorgan said this 50/50 split between tech stocks and small caps reflects the barbell trade that retail investors tend to favor.

However, it remains to be seen if the pace of retail investing will continue throughout 2021, and what areas of the stock market it will be concentrated in.

Vanda Research doesn’t see meme-stock momentum continuing for much longer.

“Squeezing highly shorted stocks is quickly falling out of fashion,” senior strategist Ben Onatibia and analyst Giacomo Pierantoniwhich said earlier this week.

jpmorgn chart

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Leverage ‘can rip your arms off,’ former TD Ameritrade boss says in warning to meme-stock retail traders

Joe Moglia
Joe Moglia, former CEO of TD Ameritrade and current chair of FG New America Acquisition.

  • “Leverage on the way up is a great thing. Leverage on the way down can rip your arms off,” former TD Ameritrade CEO Joe Moglia tells retail traders in meme-stocks in a CNBC interview.
  • Brokerage firms and financial houses dealing with retail investors must be better at educating their clients about the risks of leverage or using loans from brokers to buy stocks.
  • Moglia on Thursday addressed retail investors as AMC shares have rallied sharply in the last two weeks.
  • See more stories on Insider’s business page.

Using leverage, or borrowing money to buy stocks, can pay off for retail investors participating in the explosive rallies in AMC Entertainment, GameStop and other so-called meme stocks but they need to be aware that those trades can quickly turn and burn them financially, the ex-head of TD Ameritrade said in a CNBC interview on Thursday.

“My biggest concern is what’s going on with the individual investor … and that they’ve got to be able to understand when they use leverage what that really means,” Joe Moglia, a former CEO and chairman of the online discount brokerage, told CNBC’s “Squawk Box”.

In using leverage, or margin trading, investors borrow cash from their brokerage companies to buy stocks and pledge securities in their accounts as collateral. Margin trading increases buying power and expands profits.

“Leverage on the way up is a great thing. Leverage on the way down can rip your arms off,” Moglia said, referring to losses that can hit investors when a stock price falls. He said investing platforms and other market professionals need to improve upon educating individual investors who day trade about the risks they face from market declines and how to handle them.

“A quick example: if you bought AMC at $10, and it goes to $20, is that not enough of a profit? It goes to $30, it goes to $40. At what time do you start to trim that position or, in effect, get rid of the position altogether? There are things that we’ve got to do a better job of with day traders,” said Moglia, who is the current chair of FG New America, a blank-check company, or SPAC, that targets opportunities in the fintech industry.

Moglia spoke as retail investors have launched AMC’s price up by more than 500% since late May in defending the movie-theater chain’s shares against hedge funds selling the stock short. The rally is reminiscent of the January boom in GameStop’s price as retail investors battled hedge funds betting against the video-game retailer’s stock. GameStop shares eventually retreated sharply from an all-time high of $483 apiece.

Investors can be vulnerable when the value of the stocks they’ve purchased drops significantly. Those declines can trigger margin calls, or demands by brokers for clients to repay some of the money they borrowed. Brokers can liquidate a client’s assets to cover the debt if they fail to meet a margin call.

Retail investors have lately overpowered short-sellers betting against AMC. Short-sellers lost nearly $3 billion on Wednesday alone as AMC’s share price more than doubled, according to data from analytics firm Ortex.

“What we’ve got to be conscious of is, at some point, the market is going to turn around. The technicals are going to wear out and [retail investors have] got to be prepared for a down move in that. But so far, I think they’ve pry made a little bit of money,” Moglia said.

Investors this year are borrowing all-time high amounts against their portfolios, with margin debt reaching $847 billion at the end of April, according to data from brokerage industry regulator FINRA.

Retail trading volumes, meanwhile, have been climbing on the back of growth in commission-free brokerage accounts and user-friendly trading apps and as millions of Americans forced to stay home because of COVID-19 turned to the stock market to make money.

Moglia said retail day traders overall should learn more about long-term investing strategies which can enhance discipline.

“If they love what they’re doing and they get burned a bit, that shouldn’t send them away from the market although I recognize that’s a risk. That should tell them they need a better education, a better understanding that day-trading alone is not going to be good enough to ride out the ups and downs of what’s going on with the economy and the markets over the next several years.”

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Ask an analyst – our columnist answers your questions about how novice traders can thrive in financial markets

Stock Market Bubble
A trader blows bubble gum during the opening bell at the New York Stock Exchange (NYSE) on August 1, 2019, in New York City.

  • Insider’s new “Ask An Analyst” column offers novice investors advice on how to succeed with stocks.
  • Ryan Paisey is a veteran with nearly 20 years’ experience on the markets.
  • Find out below how you can submit him questions.
  • See more stories on Insider’s business page.

Retail investors – everyday people who buy stocks – are more important than ever in trading.

In January, Redditors saved bricks-and-mortar video game chain GameStop from being shorted, tanking Wall Street veterans in the process.

They have since also piled into cryptocurrencies, driving “meme token” Dogecoin to record highs and pumping up the value of anything from silver to lumber.

Hedge funds can no longer look down on them as people who follow the leader.

But lowering the entry barrier to the stock market has meant a lot of novices are trading money they cannot afford to lose.

Insider is launching Ask An Analyst – an advice column that aims to make you a better trader with straight forward responses to basic questions.

Read the column: How to find stocks with the most growth potential

This isn’t about listing stock picks. If you’ve wondered “how much research should I be doing on a stock? What am I doing right? What am I doing wrong?” this is the column for you.

Our columnist is Ryan Paisey, a veteran trader who has been in markets for nearly 20 years, and runs trader news service PriapusIQ.

“For too many players, the basic knowledge of the games we play are lacking, they are more concerned with guessing ‘up or down’ than understanding the basics which can immeasurably help improve their decision making process,” he says.

“I’m not here to tell you how to trade. I am here to share my 20 years of experience with those that have questions which only experience can answer.”

To submit your question, email jsommers@insider.com with “Ask An Analyst” in the subject line.

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Investors are worried Bill Ackman’s SPAC is struggling to find an acquisition target

FILE PHOTO: Bill Ackman, chief executive officer and portfolio manager at Pershing Square Capital Management, speaks during the SALT conference in Las Vegas, Nevada, U.S. May 18, 2017.  REUTERS/Richard Brian
Bill Ackman, chief executive officer and portfolio manager at Pershing Square Capital Management, speaks during the SALT conference in Las Vegas

  • Investors are getting anxious about billionaire hedge fund manager Bill Ackman finding a target for his SPAC to take public, Institutional Investor reported.
  • Ackman says a deal has been in the works since November, and that the SPAC team has done its homework.
  • Even so, if he can’t get the transaction done, Ackman said his SPAC will move on to another target.
  • See more stories on Insider’s business page.

Investors are starting to worry Bill Ackman’s blank-check company is struggling to find an acquisition target, Institutional Investor reported this week.

The billionaire hedge fund manager told investors on a Wednesday call that he will make an announcement whether his Pershing Square Tontine Holdings SPAC gets a deal done with the current target or has to move on.

The uncertaintly is making retail investors anxious. The story from Institutional Investor found sentiment was low on a “PTSH support group” page comprised of retail traders. One told the magazine that it “seems like the deal won’t happen” as Ackman keeps mentioning the idea of a backup target.

His SPAC – which launched with the goal of spending $5 billion to take a private business public – started working on a transaction in early November.

“We’ve done our homework, we like the business, we love the management team, and we are working to complete a transaction, as I said within weeks,” he said on the call, according to a transcript from Seeking Alpha.

“If we cannot get this transaction done, we will move on to target number two, and there are other interesting opportunities for us to pursue,” he added.

Following Ackman’s comments, shares of Tontine, which went public in July 2020 under the ticker PTSH, declined, closing out the day 1.2% lower.

According to a Monday filing with the Securities and Exchange commission, Tontine said it’s “currently in negotiations with a specific business target and while substantial progress has been made, significant issues remain to be addressed before a transaction can be announced and consummated, if at all.”

Several institutional investors have sold all or some of their positions in the SPAC, though its early backers are still in place. Hedge Fund Soroban Capital sold its stake of 5 million shares, Taconic Capital sold half of its 1.1 million shares, and the Ontario Teachers Pension Plan sold 4.3 million shares, though that was only part of its investment, Institutional Investor reported.

But early backers Guggenheim Capital and Baupost Group still hold tens of millions of shares in Ackman’s SPAC.

On The Wall Street Journal’s “The Future of Everything Festival,” Ackman said he and his team found an “iconic, phenomenal, great business with a great management team that meets all of our criteria.” But, the nature of the target, the complexity of the deal, and other issues have caused delays, he said, adding that the company is so attractive it will be “worth the energy and the effort.”

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Retail investors need a tech-sector recovery in order to jumpstart their risk appetite

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  • A rebound in technology shares should help retail investors move back into bets on single stocks, said Vanda Research.
  • Retail investors on a weekly basis were mostly buying equity ETFs such as SPY and QQQ.
  • A tech-sector rebound ‘will help them … rebuild the capital buffer to take on riskier bets,” said Vanda.
  • See more stories on Insider’s business page.

Technology shares have taken a beating recently, and it’s going to take recovery in the sector to rekindle the risk appetite of retail investors, according to a research firm.

The tech-heavy Nasdaq Composite index has slumped 1.5% so far this week, dragged down by escalating inflation fears. Meanwhile, a plunge in cryptocurrency prices has rippled through stocks and exchange-traded funds linked to digital currencies. Bitcoin plunged as much as 31% on Wednesday to test the $30,000 threshold.

Vanda Research finds that retail investors have been buying recent dips in equities, but they’ve been doing so mostly through stock ETFs like the SPDR 500 ETF Trust (SPY) or the Invesco QQQ Trust (QQQ), which tracks the Nasdaq 100 index. The company’s data analytics arm monitors daily retail investing activity in about 9,0000 US stocks and ETFs.

Those purchases have exceeded single stock buys if taking leverage into account, said Vanda.

“We attribute this dynamic to the lack of clear opportunities in retail favorite stocks like EVs, hydrogen, cannabis and the ARKK complex, which is driving retail investors to purchase indexed funds instead,” said Giacomo Pierantoni, research analyst, in a note published Wednesday.

The ARKK complex refers to the ARK Invest and its family of popular ETFs that’s run by high-profile investor Cathie Wood. The flagship ARK Disruptive Innovation ETF has slipped roughly 2% since the end of last week as inflation and rate fears hurt high-growth, tech-focused investments.

One “important factor for retail investors to re-engage with equities is a recovery in tech stocks,” said Vanda. “Because a large part of their portfolio is tilted towards the sector, a rebound will help them to cover some of their recent losses and rebuild the capital buffer to take on riskier bets.”

Vanda noted that GameStop, a popular stock with retail investors, has lacked flows from such investors this week. It said GameStop’s recent rally was most likely driven by institutional short-sellers who were pre-emptively closing shorts as prices in stocks favored by retail investors active on Reddit’s Wall Street Bets forum surged. AMC Entertainment, meanwhile, had experienced an increase in retail flows.

“Why did retail investors pick AMC? As opposed to GME, where short positions have been high but stable, AMC has seen a large increase in short interest over the last couple of months,” said Vanda.

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