Retail Have Been More Aggressive Buyers of The Dip

retail have been more aggressive buyers of the dip
The dips have provided retail investors with discount opportunities for next rebound

Retail investors have been taking advantage of the dips in the market.

While hedge funds are tanking stocks due to selling, retail is buying the dip where they can.

Bank of America is reporting hedge funds are reducing their exposure due to this.

I’ll talk about it more down below.

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The stock market gets introduced to more of the public

stock market investing
Investors are buying the stock market dip

The stock market wasn’t meant for everyone, but over the last few years more people have jumped in headfirst.

Robinhood made it possible and easy for the public to start their very first investment using only their mobile device.

The app made it fun to buy stocks and gamified it to attract more customers.

Webull and other platforms have introduced the general public to stock market investing.

And this new generation of investors are way different that the previous.

Bank of America has noted, “retail clients have been more aggressive buyers of this dip than other 10% corrections post-crisis..”

The bank thinks it’s due to what generally comes right after a crisis.

And they’re not wrong.

The retail community now has more research at hand than they ever did before.

History shows that the stock market surges post-conflict.

While the Russian-Ukraine war is affecting all global markets, retail investors continue to buy the dip.

Hedge funds are tanking the market with sell orders

Stock market dip - hedge funds tank the market with sell orders
Stock market dip – hedge funds tank the market with sell orders

Bank of America thinks there seems to be some balance going on here with this increase of retail investors buying the dip.

And I can see how, but it doesn’t level out the playfield for retail investors.

While BofA might say that hedge funds are reducing their exposure due to so much retail investors buying the dip, overleveraged short positions continue to leave retail at a disadvantage.

The bank said there was a record outflow from stocks from its hedge fund clients last week.

According to the industry, most market participants don’t like the idea of “dumb money” buying while “smart money” is selling.

But Bank of America says this is a positive signal for future performance of the stock market.

Knowing that Bank of America is one of the top 10 financial institutions shorting AMC stock, it only tells me they’re figuring out how to adapt to market changes.

The ‘ape’ community has been buying the dip and the price surges of both AMC and GME stock for over a year now.

Is it possible that the retail community is creating a much more stable playground for hedge funds to short in the market?

Afterall, retail investors going long are holding their positions much longer too.

“S&P 500 returns following period of retail inflows have been above-average and return post-retail selling have been below average.”

Bank of america

Bank of America says their institutional clients have also been buying the market declines stating this is a positive signal for future returns of the stock market.

Advantages of buying the stock market dip

  • Averaging down your initial investment
  • Profits accumulate quickly during a rebound
  • Increases your position of a security at a ‘discount’
  • Perfect for long-term retail investors

Retail investors are buying the dip to accumulate more securities at a discount enabling them to increase their gains long-term.

Read: Is your stock portfolio down? 3 tips to navigate the weather

Will the stock market rebound?

will the stock market rebound?
Will stocks go up again? – Stock market dip

History has shown us that the stock market tends to rebound post-conflict.

And with both retail investors and financial institutions buying the dip, a bounce back should be promising.

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Read: The best thing you can do when the markets are tanking


1 Comment

  1. Frank Nez

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