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‘Money to be made’: Meet the new retail investors flooding the market amid the pandemic

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  • Jul 10th, 2020 9:05 am
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‘Money to be made’: Meet the new retail investors flooding the market amid the pandemic

In the National Post today:

https://business.financialpost.com/inve ... e-pandemic
Three months after one of the worst stock market crashes in history, the foundation of the investment industry has shifted. The COVID-19 crash decimated portfolios, but it also brought an unprecedented influx of new retail investors into the game. In Canada alone, more than 500,000 new discount online brokerage accounts were opened in the first quarter of 2020, according to Investor Economics, three times the regular pace. So, who are these new investors?

I had read that there were a lot of ordinary people piling into the stock market since the lockdown. I had always assumed that it was simply sheer boredom, or sports gamblers looking for a new way to get their fix. But the article does a pretty good job at putting a human face on this phenomena. I wonder, though, if all of them are really ahead of the game like they claim to be?

Anyways, which person's story do you find the most entertaining? I personally like Jayden (last one on the list), the boy wonder. A day-trader by day, a stockboy by night. Already up by 10K, and figures he could stop working for The Man anytime he likes. I genuinely wish him well, but if I were him I wouldn't quit my job nor move out of my parent's house (if that is where he is living) just yet.
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Jr. Member
Jun 12, 2015
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Earth
Looks like the public servant has done good for himself. And I thought Shopify was expensive at $140 and then at $400 Unamused Face 🤣
Deal Addict
Mar 10, 2011
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A coworker of mine is one of the new investors. After listening to me talk about blue chip dividend paying stocks for well over a decade, he took the plunge and opened a discount brokerage account. He said it took a long time as the institution was swamped with all of the applications for new accounts being opened. Anyway id say he cashed in by getting some nice blue chips when they were beaten down in recent months.
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Aug 16, 2015
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If it's true we could be approaching a major top then.
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Jul 12, 2008
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livefreeordie wrote: Looks like the public servant has done good for himself. And I thought Shopify was expensive at $140 and then at $400 Unamused Face 🤣
I work with public servants, nothing beats 2 married teachers or a firefighter married to a TTC operator. My investment in Shopify that I sold would have brought me to tears if I didn't move the profits to something else that did just as well, I remember short sellers having dreams about this stock when it passed $400 last year and now this nonsense.

The thing with all these new accounts, its easy to buy when the market is down and hold a bit but what happens after? when do you sell? can you leave the money there or is it needed for something else. How soon before frustration kicks in when everything reopens?

Time will tell
[OP]
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badmus wrote: The thing with all these new accounts, its easy to buy when the market is down and hold a bit but what happens after? when do you sell? can you leave the money there or is it needed for something else. How soon before frustration kicks in when everything reopens?

Time will tell
It would be interesting if, say after a year or two or whenever things get back to normal, National Post ran a follow-up piece on these 10 investors to see how they are faring.
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May 22, 2003
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https://www.nytimes.com/2020/07/08/tech ... ading.html

"Mr. Dobatse, now 32, said he had been charmed by Robinhood’s one-click trading, easy access to complex investment products, and features like falling confetti and emoji-filled phone notifications that made it feel like a game. After funding his account with $15,000 in credit card advances, he began spending more time on the app.

As he repeatedly lost money, Mr. Dobatse took out two $30,000 home equity loans so he could buy and sell more speculative stocks and options, hoping to pay off his debts. His account value shot above $1 million this year — but almost all of that recently disappeared. This week, his balance was $6,956."

Interesting bit...

"For each share of stock traded, Robinhood made four to 15 times more than Schwab in the most recent quarter, according to the filings. In total, Robinhood got $18,955 from the trading firms for every dollar in the average customer account, while Schwab made $195, the Alphacution analysis shows. Industry experts said this was most likely because the trading firms believed they could score the easiest profits from Robinhood customers."
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Jun 15, 2012
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Well this explains why so many “hot and fancy” tech and warehouses stocks make new ATH despite making peanuts 🥜 . On contrary many large cap companies with tremendous cash flow didn’t grow much in the last decade.
No need to type thank you; upvote=thanks.
Buffett, investors are focusing “not on what an asset will produce but rather on what the next fellow will pay for it.”

“Because gold is honest money it is disliked by dishonest men.” – R. Paul
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ukrainiandude wrote: Well this explains why so many “hot and fancy” tech and warehouses stocks make new ATH despite making peanuts 🥜 .
No, it doesn’t.

This is just you trying to bend the narrative to fit neatly into the end result you have already predetermined.
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FarmerHarv wrote: No, it doesn’t.

This is just you trying to bend the narrative to fit neatly into the end result you have already predetermined.
Oh yeah ?
And those half a million new account were probably buying Canadian banks and airlines or maybe energy; but NOT “fancy “warehouse” stocks that everyone is buying and talking about “
In Canada alone, more than 500,000 new discount online brokerage accounts were opened in the first quarter of 2020
Do you have records of what they bought with all the credit money on newly opened accounts?
After funding his account with $15,000 in credit card advances, he began spending more time on the app.

As he repeatedly lost money, Mr. Dobatse took out two $30,000 home equity loans so he could buy and sell more speculative stocks
No need to type thank you; upvote=thanks.
Buffett, investors are focusing “not on what an asset will produce but rather on what the next fellow will pay for it.”

“Because gold is honest money it is disliked by dishonest men.” – R. Paul
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ukrainiandude wrote: Well this explains why so many “hot and fancy” tech and warehouses stocks make new ATH despite making peanuts 🥜 . On contrary many large cap companies with tremendous cash flow didn’t grow much in the last decade.
Exactly. Look at facebook pages ("Canadian Day Traders" has one from almost nothing to filled with noobs) , or look on rfd. All end up bag holding already. Once the market really falls it will be very bad. .com 2.0...15 years for the market to return to even, though most of them held garbage stocks to zero. As will this group
If you aren't willing to take small losses, then you will take big losses. This is my guarantee. -
Mark Minervini
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This is happening around the world. Including on "markets always go up" rfd

"“There’s no way I can lose,” said the 36-year-old, who works at a technology startup and opened her first trading account in Beijing on Tuesday. “Right now, I’m feeling invincible.”"
http://archive.vn/JwQBB#selection-3015.0-3015.181

for now
If you aren't willing to take small losses, then you will take big losses. This is my guarantee. -
Mark Minervini
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May 22, 2003
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I agree, this sounds like classic bubble. Look at "hot stocks" LVGO, LMND, NKLA, etc. Looking to start trimming my positions and heading into cash again. Only thing, fed keeps printing money and going straight into people's hands where they dump money back into stock market, so this streak might continue longer - but for how long?
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notenoughsleep wrote: I agree, this sounds like classic bubble. Look at "hot stocks" LVGO, LMND, NKLA, etc. Looking to start trimming my positions and heading into cash again. Only thing, fed keeps printing money and going straight into people's hands where they dump money back into stock market, so this streak might continue longer - but for how long?
Why LVGO soared 2 days ago. At least there's some legitimacy behind it being "hot" unlike NKLA.
https://seekingalpha.com/news/3588999-l ... e-high-87m
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BD12 wrote: Why LVGO soared 2 days ago. At least there's some legitimacy behind it being "hot" unlike NKLA.
https://seekingalpha.com/news/3588999-l ... e-high-87m
$87 million revenue, $9.5 billion market cap? I understand value investing is no longer applicable in this market, but it's getting ridiculous. I own DOCU and the stock has quadrupled in the last 6 months - I like it's growth/future but the valuation is insane!
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I remember the late 90s. Online brokerages were just starting to become a thing. Everybody and their dog was making a killing in the FAANGs of those days, so I got into the game as well. Nasdaq hit 5k, then hung out in the 1000's for the next four years. It was 15 years before it got back to 5k. Where was the Fed back then? That was an expensive but valuable lesson.
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bubak wrote: I remember the late 90s. Online brokerages were just starting to become a thing. Everybody and their dog was making a killing in the FAANGs of those days, so I got into the game as well. Nasdaq hit 5k, then hung out in the 1000's for the next four years. It was 15 years before it got back to 5k. Where was the Fed back then? That was an expensive but valuable lesson.
As long as you buy index fund, it will eventually recover.
WTB amazon gc @90%
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divx wrote: As long as you buy index fund, it will eventually recover.
Until one day it doesn't
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divx wrote: As long as you buy index fund, it will eventually recover.
If only investors were immortal.
No need to type thank you; upvote=thanks.
Buffett, investors are focusing “not on what an asset will produce but rather on what the next fellow will pay for it.”

“Because gold is honest money it is disliked by dishonest men.” – R. Paul
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notenoughsleep wrote: Until one day it doesn't
Its probably true, but it might be if your kids hold that long, or grand kids (look at japan), because you are long dead by the time it does. Of course, "back to even" doesn't account for 15 years (nasdaq) or who knows how long for the Nikkei, of inflation


Protecting capital is number 1. Sadly for most around here it isn't. One day they will find out.

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