VALUE: After Hours (S08 E15): How Retail Investors Are Moving Markets (And Why Institutions Are Following)

During their recent episode, Taylor, Carlisle, and Matthew Tuttle discussed How Retail Investors Are Moving Markets (And Why Institutions Are Following). Here’s an excerpt from the episode:

[Matt] So I’ve got two views. There is that. There’s something that I think is just as powerful and maybe more, but yeah, I think, you know, whenever anyone says, oh, Mag 7, Mag 7, it’s like, dude, there is so much money going into the Mag 7 every single month.

You know, people going into the S&P, people going into the Qs, dollar cost averaging, 401ks, institutions that, you know, it will be very hard for the Mag 7 to die unless the whole market is going down. So I think that is certainly something out there. The big will keep getting bigger.

What’s maybe more interesting to me is the rise of the retail investor. So what we had coming out of COVID is, you know, a generation of retail guys who were sitting at home, boss isn’t looking over their shoulder and they start trading. Now we’ve got technology where they get connected.

They get connected over social media. They get connected over Discord. They start getting on the same companies.

They start realising when they kick a hedge fund down that they’ve got power. And then they start getting smart. They move on from the GameStops and the AMCs and they start identifying these themes.

And they don’t have the constraints that, you know, a fund manager has. A fund manager is going to closet index. A retail investor is going to go all in on Sandisk or all in on Momentum.

You know, they’re not measured against an index and they’re going to move the market. And then what you have happen is the institutions start realising it and start doing the same thing. So for example, my hedge fund manager I mentioned, you know, told me, he’s like, you know, we were killing it.

And then a couple of years ago, we stopped killing it. And one day our boss came in and said, you know what, screw this. We’re just going to buy the stocks people like and short the stocks they don’t.

And they’ve been killing it ever since. So I think that’s why this market has become so thematic because the retail guys are in on the themes. The institutions jump in and it’s why you have these stocks go parabolic that just don’t, you know, going back to like looking at how things happened in the past, it just doesn’t work that way.

Now, again, it may eventually. Don’t chase these names. But, you know, it is a different market.

And I think it’s because of the retail investor and what they’ve caused.

[Tobias] Do you feel like it’s streakier than it was before? Like some of these things?

[Matt] It is way streakier than it was before. And, you know, in the dips, retail guys buy the dips. You know, the institutional guys, they get margin called and they’re worried about their job and all this stuff.

You know, the retail guys, they’re buying the dips. And I think that’s one of the things we saw with the Iran war. It’s like, you know, why aren’t we down?

I think a lot of it is the retail guys. You know, they saw the stocks they like get hurt and they’re just buying the dips hand over fist.

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VALUE: After Hours (S08 E15): How Retail Investors Are Moving Markets (And Why Institutions Are Following)

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