Gen Z and Millennials Lead ‘Retail Investing’ Trend – Owning Up to 25% of the Stock Market
In spite of rising jobless claims, lockdowns and tens of thousands of businesses permanently closed due to the pandemic, Wall Street, with a few dips here and there, continues booming.
Some industry experts are attributing stock market bubbles to amateur retail traders. But are there enough retail traders — and are they investing enough money with single shares and fractional purchases — to move the needle?
In the summer, when people were locked down with travel plans canceled and no live sporting events to attend, many turned to investing apps to dull the boredom. When they had enough of interacting with TikTok, Netflix or video games, a few dollars could gain them access to a new world.
Using the money typically spent on concerts or eating out, millennials and Gen Z started backing their favorite companies through stock purchases. And if they got lucky, they made a few bucks along the way.
Retail investors accounted for as much as 25% of the stock market’s activity during the summer, compared to just 10% in 2019, Joe Mecane, head of execution services at Citadel Securities, told Bloomberg TV.
Not only are retail investors likely making a difference in the day-to-day stock market, they aren’t doing it in the way most people perceive. “There is a mischaracterization about retail investors,” says Katie Perry, vice president of marketing at Public, a social investing app designed for millennials and Gen Z. “They tend to get labeled under the ‘speculative’ or ‘day trader’ categories. It’s more nuanced than that. What we’re seeing is a wave of people interested in businesses and trends who want to apply those interests to their investing strategies.”
The desire to invest in stocks and exchange-traded funds that match people’s passions and values, Perry says, has created an intersection of business and mainstream. “I feel like entrepreneurs are the new celebrities,” she says.
She notes that three-quarters of the Public social investing community is made up of people who say they are seeking long-term investments. But they also want to make sure these investments align with their values.
Look on Public’s “Trends” page and you’ll see the “most traded” stocks as a list of household names, starting with Tesla (NASDAQ: TSLA), Apple (NASDAQ: AAPL) and Amazon (NASDAQ: AMZN).
“When people start investing, they look for stocks that align with their personal interests, professional careers or values. It makes the stock market feel more attainable,” Perry says. “The lightbulb moment for a lot of people is that these companies [on the stock market] make things we interact with every day.”
Making stocks and finance attainable and inclusive could be one of the welcome side effects of 2020. In most cases, Public users are purchasing a small slice of stock, where the returns aren’t likely to change their lives in either direction. But they are taking the first step through what Perry calls “a personal point of entry.”
She says, “The market doesn’t have to be scary. It doesn’t have to be this closed off environment. Investing is a skill you can improve over time.”
In an effort to make stock trading even more accessible, Public recently introduced a “Gift” feature where you can send slices of stocks or single shares to friends, family and colleagues.
Can’t find a Sony PlayStation PS5 on shelves this holiday season? Maybe you can give a gift of Sony stock to the one you love instead.
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