Retail Investors Abandon Stock Market and ETFs in Droves
Courtesy of John Nyaradi’s Wall Street Sector Selector
MarketWatch.com reports today that retail investors “appear to be scaling back their trading activity in June.”
Trading is down approximately -30% in so far in June compared to May, according to a report from Sandler Oneil who says, ”We suspect the May 6 ‘flash crash’ as well as the market performance since then … have shaken the retail investor’s confidence” and that “June trading levels could be at multi-year low levels.”
Not good news probably for ETrade (ETFCD) or Schawb (SCHW).
This report comes on top of recent news that Morgan Stanley (MS) is closing 300 offices and laying off 1200 employees, along with lighter than normal volume in major equities markets and fund outflows of over $1 Billion for the week ending June 2nd as reported by the Investment Company Institute.
It’s a “deer in the headlights” kind of environment wherein retail investors are abandoning the domestic equity market and that could make it a perfect time to “buy” since the “dumb money” almost always gets it wrong.
However, my opinion is that you can’t just buy anything and hold on, “buy and hold” or “buy and hope.”
I’ve said recently that current conditions offer enormous opportunity and that many millionaires will be created over the next few years. But they won’t be buy and hold investors. I’m afraid those days are gone, maybe forever, replaced by this new volatility and challenging markets that will very likely require a disciplined trading plan for success.
John
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See also: Meltup "Abysmal Volume" Summer Approaches, Even As Americans Now Openly Shun Stocks, Zero Hedge
John Nyaradi publishes Wall Street Sector Selector, an online newsletter specializing in sector rotation trading using ETFs. John is offering PSW readers a 30 Day Free Membership and Free Special Report, "Slay the Dragon Within: How to Make Your Emotions Work for You Instead of Against You." His service provides signals for going long and short using standard and leveraged ETFs. Free Membership Subscribers also get access to the Wall Street Sector Selector Monthly Webinar and a second Report, "How To Avoid the Buy and Hold Trap." – Ilene
