The stock-market impact of millennial investors has been overblown as trading volumes decline — and it's actually the older crowd who's exerted more influence, JPMorgan says
retail investorswere "partly responsible" for the market's price swings through October and November, while younger traders played "a rather modest role," JPMorgan strategists said Tuesday.
- While the younger group tends to invest in individual stocks and options, the older cohort more often uses funds to invest.
- Older investors have been selling equity funds and buying bond funds through most of 2020, acting as a drag on the stock market, the bank said.
- Retail investors' trading volumes fell from roughly 23% of all market volume in June to just 16% in September. The decline "raises questions about the narrative" that retail investors were behind the market's summer rally,
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A surge in retail-investor trading activity coincided with stocks' climb to record highs in September, leading Wall Street to wonder whether individual traders were a new market driver. First-time millennial and Generation Z investors garnered attention for risky day-trading habits and interest in highly volatile stocks.But while Wall Street legends including Leon Cooperman and Warren Buffett cautioned younger investors against high-risk plays, older retail traders played a bigger role in the market's recent turbulence, according to JPMorgan.
While NYSE margin-account data for October hasn't been published, small call-option flows point to a similarly modest impact of younger traders over the past two months, they added.Falling trading volumes detract from claims that retail investors have taken over the market. Trading volume at retail brokerages surged over the summer as people rushed to profit from economic reopenings and the market's rapid ascent. Trades made through Robinhood, E-Trade, Charles Schwab, and TD Ameritrade accounted for a record high 23% of all US equity market volume in June. But that share fell to 16% in September, landing just above pre-pandemic levels. Read more: A portfolio manager at $38 billion Baron Funds shares his checklist for investing in the most promising SPACs — and names 3 of the booming 'blank-check companies' he finds attractive now
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