Retail investors’ relentless buying this year is starting to pay off
Retail investors’ decision to “buy the dip” paid off in April, JPMorgan analysts say.
After underperforming for much of the year, retail investors’ faith in relentless buy-the-dip strategies is starting to pay off, as a surge in prices of top retail picks like Tesla, Palantir, and Nvidia has helped them sharply cut losses compared to the market.
Retail investors propped up the markets in April, analysts at JPMorgan say, who produce some of the best granular data on the trading activity of the crowd:
“The buy-the-dip strategy in early April has clearly paid off.
We estimate retail investors’ portfolio is up 15.1% since Apr 8th , closely aligning with the market performance of +15.8%.
YTD, their portfolio is down slightly by 2% vs. the market which is almost flat.
Notably, their buy-the-dip strategy and gradual buying during the subsequent rally (with a reduced pace) has historically been profitable. For example, during the 2020 COVID recovery from the March low to the June high, retails added $46Bn to their portfolio, resulting in a YTD return of +30.7%, more than double the market performance of 15.3%.”
Back in late March, JPM estimated that retail traders had been trailing the market by about 4%.
In fact, retail’s share of activity hit 36% on April 28 and April 29, which JPM analysts called “the highest level in our history.”
For the record, it seems that individual investors have moved relatively quickly to lock in some of those recent gains with sales of some popular stocks.
Here’s JPM’s list of top sales for retail traders over the last week:
