I believe there are fewer small traders that are active in the market. I’m going to go more into why in a follow-up to this post, but in January Robinhood revealed in its fourth quarter 2020 earnings report that its number of users fell from 18.9 million to 17.3 million. It also said that its revenue fell by 35%. It will be interesting to see what they reveal in the next report.
What I really want to point out to today, though, is that the individual traders that are active in the market are taking greater risks. While we have seen an increase in volatility in the stock market and new leadership emerge in gold, silver, and commodities this year, the stock market small fry is not only ignoring these trends where they could make easier money, but are simply multiplying the risks they are taking to try to make money.
That’s a dangerous thing to do and not necessary.
But take a look at the top trades stocks on Fidelity last week on Friday.
At the top of the list is TLSA and TLRY. TSLA is almost always number one on this daily list and is number one or two every day on Robinhood as the most owned stock among their customers. What is more troubling, though, is the really nutty stocks like GME, AMC, MULN, and SNDL. And also the fact that the TQQQ is at the top. The WSJ Journal had an article this weekend on how triple ETF’s are exploding in volume since New Years, with stats showing it is small traders piling into them.
In other words, while the stock market has gone into a bearish phase this year, the small self-directed trader is responding to that by increasing their risk with leverage and highly volatile junk stocks. There is not a single position in this list of thirteen above that I would buy. Triple ETF’s are toxic, because they erode in value over time.
This is very troubling.
In past market tops when people began to have difficulty holding on to the popular stocks and making steady what would happen is that many people would exit the market and give up while others would try to become daytraders fighting the market.
There reality is that there is always a bull market somewhere and the easier thing to do is just focus on that.
If only these people would take a look at what is happening with commodities and gold and silver.
It’s like the 1970’s in these markets, but these small traders are acting like it is 1999 or 2020 all over again.
I know a lot of people need to see gold up above $2100 now before they will believe in it, but I hope to wake up these people up, even if it is tough to get them to listen.
I try.
It’s why I do these Youtube videos about gold and silver fairly frequently.
If you missed the last one I did and posted yesterday you can see it here.
-Mike
