Retail investors are on track to plow $400 billion into stocks in 2021 with the day-trading boom still in its early innings, Goldman Sachs says
- Retail traders are set to pour a net $400 billion into the equity market this year,
- That's a hike from the analysts' previous estimate of $350 billion.
- Goldman's basket of retail favorites has outperformed the S&P 500 by 3 percentage points.
Retail traders responsible for driving record rallies in
In the Friday note, the analysts, led by David Kostin, raised their estimate for full-year household net equity buying forecast to $400 billion from $350 billion in light of "high cash balances and continued retail participation."
Last year, households poured $367 billion into equities, while in 2018 and 2019, they were net negative on the asset class, the Goldman Sachs data showed.
"The retail bid is back," the analysts wrote, noting that in the first quarter alone, households were the largest source of equity purchases, netting $172 billion.
The "renewed strength in retail activity" has pushed Goldman's basket of "retail favorites" to top the S&P 500's performance by 3 percentage points this month. Meanwhile, stocks with active
Retail traders came into the spotlight earlier this year when they caused a massive rally in shares of video-game retailer
In May, retail traders renewed their interest in the new class of stocks as they drove up shares of movie-theater chain AMC Entertainment. Other meme-stock classics also rallied, as retail traders added new stocks to the basket as well.
Retail traders will likely continue to favor stock
Currently, households allocate 44% of their assets to equities, the analysts said. That nearly matches the 46% all-time high allocation from 2000, just before the dot-com bubble burst.
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