In today’s New York Times there is a story about how many Americans are using their stimulus checks to invest in securities (Recast as ‘Stimmies,’ Federal Relief Checks Drive a Stock Buying Spree). This is not a minor phenomenon: a decade ago 10% of all trading was done by retail investors and during this past year that number has ballooned to almost 25%. How impactful have these checks been?
“In a recent note to clients, market analysts with PJMorgan found that the intensity of retail trading in the stock and options markets ‘has exhibited correlation with previous rounds of U.S. stimulus checks.’”
The month after the direct deposits/checks were received (April ‘20 and in January) the market went way up, which portends that we may be on the cusp of another big jump as Biden stimulus money is currently getting distributed. Retail investors are continuing to learn how to play the stock market game and flex their collective muscles. The question is are funds being well invested for the long term? And what happens when the stimulus program is over?
“Aim for the moon. If you miss, you may hit a star.” – W. Clement Stone