The Covid-19 factor in the retail investor boom
The rise of the retail investor has been well documented in recent times. Previously often occupying a niche slot in shareholder bases, retail investors are now well and truly out of the shadows and enjoying their own spot in the limelight.
Technology and the Covid-19 pandemic have been major influences behind this new wave of retail investors, who have opened enormous numbers of brokerage accounts since the lockdowns of 2020, attracted no doubt by commission-free trading apps like Robinhood and Etoro.
Factor in the ability to buy fractional shares, which places share trading within the scope of those without thousands to spend, and it's easy to see why a much broader proportion of the population has become interested in direct investing.
As Jeremy Salvucci, manager at technology platform The Arena Group, writes in an article for TheStreet.com: ‘Between unemployment benefits and pandemic stimulus checks, millions of Americans had both money to spend and free time to kill. At the beginning of the pandemic, stocks plummeted in value but the crash was short-lived and the S&P 500 quickly rebounded. This bull market attracted a new wave of young and plugged-in investors with free time and unspent cash.
‘Retail investors were excited about the stock market – and the technology sector in particular – and stocks seemed to have nowhere to go but up.'
According to Charles Schwab, up to 15 percent of retail investors may have invested for the first time ever in 2020.
