Earlier this month, the Wall Street Journal ran a prominent piece called “As Dow Tops 25000, Individual Investors Sit It Out“, that garnered quite a bit of attention.
Part celebration of Dow 25,000, part requiem for a time when retail investors were “involved” in historic rallies, the piece featured a series of anecdotes from those who “missed out” on the gains logged since the bull market began following the crisis. The people the Journal interviewed gave a variety of reasons when asked why they remained on the sidelines, ranging from crippling student debt to not trusting CNBC.
That article got a lot of criticism and for good reason. For one thing, the Journal made only passing reference to the fact that what’s come out of actively managed funds made its way back into stocks via ETFs and on top of that, the authors didn’t seem to fully grasp what institutional money represents. Ultimately, the piece was more interesting for the anecdotes than it was for anything else.
Well needless to say, flows into equities in the new year have approximated a tsunami. We’ve hit full-on, FOMO, fuck-tard as stocks race higher, blowing past nearly half of Wall Street’s year-end targets on the way to trading in overbought territory for an incredible 17 straight sessions and returning 6% YTD.
According to BofAML, some $33.2 billion flowed into equity funds in the week through Wednesday, a record in data going back to 2002.
In light of that, WSJ is out with what amounts to a follow-up piece to the one mentioned above and they’re sticking with the notion that “individual investors sat out most of the nearly nine-year bull market”. Whether you believe that or not, the rest of the Journal’s new piece is hard to argue with because the gist of it is that everyone is now buying hand over fist.
Here’s the scariest excerpt (and the part that’s getting some attention on Saturday):
Discount brokerages TD Ameritrade Holdings Corp., E*Trade Financial Corp. and Charles Schwab Corp. reported surges in client activity at the end of 2017 that have accelerated in January.
The firms attributed much of the activity to retail, or individual, investors who are opening brokerage accounts for the first time, some of them lured by the boom in cryptocurrency and cannabis investments .
The Journal goes on to quote E*Trade’s Chief Executive Karl Roessner from the Friday Q4 call. If you go and you listen to that call, it is rather disconcerting. Here’s one funny soundbite: