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A revolution of retail trading

Curtis Haigh Blog

WSB YOLOThis last couple of weeks we have seen a revolution of retail trading.

While many folks still work from home and limit their exposure to the outside world, the stock market is reaching all time highs fueled in part by “cheap money”. With almost unlimited stimulus from the fed and low interest rate guidance for the foreseeable future, this trend does not look like its slowing down any time soon.

Outside of all the Reddit excitement we have recently seen, one day it seems like Cannabis stocks are all the rage, then the next it is back to big tech. Don’t forget the cyclical trades, or maybe investing in bitcoin.  It seems like there is no shortage of two very important components: a) time b) money.

What is perhaps most interesting to me is the revolution of retail traders coming to the market. Why do I say revolution as opposed to evolution? It would almost seem as though this massive spike in retail investment has happened almost overnight.  An evolution would usually happen over a much longer period of time. The emergency of no commission brokers certainly have added fuel to the retail fire.

Apart from my phone ringing off the hook for the last two weeks asking me if I am a stock broker (I am not), I can’t help but get excited at what is transforming in front of my eyes.

With a great understanding of technology and a relatively low barrier to entry, a new generation of investor has arrived.  Why am I so excited about this?  First the first time in years, there seems to be a shift to ‘saving’ among many people.  I receive many calls every week from clients who are eager to start saving and learning about the investment and retirement planning process.

Perhaps 2021 will be somewhat of a rebirth of the “saver”.

One of the questions I have received quite a bit recently is whether or not I (as a firm) support clients who want to trade on their own.  The answer? Absolutely!  I thought it was sort of a strange question when I first starting hearing it, but then I found out that quite a few clients have been moving away from advisors that do not support their decision to trade and invest on their own.  It sort of draws a parallel to what is happening on Wall street right now and the war between the retail investor and big hedge funds.  It almost seems like some advisors or market participants are quite content with keeping their clients in the dark; and “Letting the big kids do it”.  I could not disagree more!

While it is VERY important to invest within your own means, and being very cautious about the amounts invested, I see absolutely no harm in a person wanting to research and eventually participate in the financial markets on their own, or with the help of a broker.  Some of the most engaging discussions I have with my clients are when they tell me what types of sectors they are most interested in based on their own research, and what investing means to them apart from just making money.  These two-way discussions are leading to very meaningful relationships with our clients, well thought out and clearly defined objectives and clients who are generally sticking to their plans.

So, that said, I tip my hat to new retail traders!  Don’t risk more than you can afford to lose, be careful, and don’t make emotional decisions.

Aside from that, as a firm we support retail traders and the revolution of the financial literacy that is ultimately stemming from it!