"Zoom in: Retail has enough buying power to reshape entire asset classes, which recently played out as investors rapidly bid up the price of silver. Amid a parabolic rise in silver prices last week, the precious metal became the second most popular trade on the Interactive Brokers platform, which is used by many retail investors. Then, silver crashed, falling 40% from its prior highs."
"Yes, but: Silver rallied 8% Tuesday, in an example of the retail investors' favorite trade: buying the dip, or piling into an asset when the price drops. It's a trade that has worked for the group: the S&P 500 has recovered from every dip it's ever had, though the time horizon for that recovery can vary widely, and retail is often buying dips on single stocks or other assets. The risk of buying the dip is that it works until it doesn't."
"State of play: Investments are taking on an increasingly bigger share of the wealth picture for everyday Americans, according to the JPMorgan Chase Institute. Retail investing makes up about a quarter of daily trading volume on average, according to Jefferies. Young people are also increasingly viewing investing as a source of income, according to a survey from the Oliver Wyman Forum."
Investments are becoming a larger portion of household wealth, with retail trading comprising roughly a quarter of daily volume and younger people increasingly treating investing as income. Retail buying power can reshape asset classes, as shown by a parabolic silver rally that briefly made the metal a top retail trade before a 40% drop. Retail investors commonly buy the dip, a strategy that has often succeeded amid rapid recoveries, but many younger investors lack experience with prolonged slumps. A sustained downturn could spook retail participants, prompting withdrawals that might deepen market declines.
Read at Axios
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