Retail investors show signs of fatigue after last year’s trading frenzy – report

Jan 19 (Reuters) – Retail investors were less keen on buying falling U.S. stocks on Tuesday, the latest sign of possible fatigue after last year’s tech-fueled trading frenzy, said Vanda Research analysts in a weekly note.

Individual investors bought $1.6 billion worth of stocks on Tuesday when U.S. equities sold off sharply after weak results from Goldman Sachs (GS.N) and a surge in U.S. bond yields.

In contrast, they had bought nearly $2 billion on September 28 when the S&P 500 fell 2%.

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“Retail investors bought much less than they usually would,” Vanda’s Ben Onatibia and Giacomo Pierantoni said of Tuesday’s session.

“This could be the first sign that retail fatigue or capitulation is setting in, at least in the tech space.”

Vanda’s research note comes as enthusiasm around so-called “meme stocks” also appears to be waning, a year after GameStop Corp’s frenzy when retail investors coordinated on online message boards to buy heavily shorted stocks.

A report on Friday showed young investors losing interest in these “meme stocks”, with Gen Z’s attention turning to companies in areas such as electric vehicles and the “metaverse”. Read more

Much of Tuesday’s buying was focused on ProShares UltraPro QQQ (TQQQ.O), a leveraged ETF that targets three times the one-day return of the Nasdaq 100 Index (.NDX), helping to cushion the blow institutional sell-off in the sector, Vanda analysts said.

Even Microsoft Corp’s (MSFT.O) $68.7 billion purchase of “Call of Duty” maker Activision Blizzard (ATVI.O), the games industry’s biggest deal in history, failed to lift the spirits of retail investors. Read more

Retail investors were net sellers of Activision on a day when its shares jumped 26%, the research house said.

Shopping at retail favorites including Tesla Inc (TSLA.O), Apple Inc (AAPL.O), Advanced Micro Devices Inc (AMD.O) and Nvidia Corp (NVDA.O) also fell in the amid a tech sale that began last month, according to Vanda Research.

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Reporting by Medha Singh in Bengaluru; Editing by Saumyadeb Chakrabarty

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