Recent comments from the head of Canada’s largest stock exchange operator said that the group is seeing shifting sentiment among retail investors. The trend is to take risks off the table and put their money to good use in higher-quality stocks.
“What we tend to see is that trading activity, both retail and institutional in general in an uncertain market, you’ll see what I call a flight to quality in terms of more investment in higher-quality, higher-value names with more predictable earnings streams and dividend appreciation,” John McKenzie, chief executive officer of TMX Group, said in an interview with Yahoo finance.
In this article, we will give investors some insight into the latest trends in meme stocks and how they can shift into higher-quality stock market investments.
Buying low and selling high, beats buying junk
The pandemic lockdowns in 2020, and the resulting stimulus checks, meant citizens were locked at home with time and money on their hands. This led to a surge in retail investment as many decided to take on day trading as a new opportunity.
Retail trading saw a record year in 2020, as unprecedented market volatility and the lockdowns created a unique opportunity for day trading. JMP Securities estimated that the brokerage industry added roughly 10 million new clients in 2020, while the Robinhood app attracted 6 million new clients.
The retail trading boom also played a big factor in the continuation of the day trading trend in 2021 because of the huge, short squeeze in GameStop’s stock in January of that year. The retail company saw an epic short squeeze that resulted in a move of 2,000% higher.
That led to a wave of new investors dreaming of joining the wave higher, but the stock has since tumbled 82% from its highs.
The creation of the GameStop squeeze was fueled by the use of online share trading platforms, but unfortunately, many have seen their savings disappear in a wave of broken companies. Bankrupt car hire firms, cinema chains bashed by the lockdowns, and forgotten cell phone makers have also seen attention on their stock but without the same results.
How can retail investors step into a new arena?
Luckily for this new wave of retail investors, there are a growing number of platforms seeking to make life easier for investors to purchase high-quality stocks.
Many have now realized that without a huge wave of short sellers, companies need quality management teams, strong products, and passionate staff.
The market in 2022 also burst the bubble of technology stocks that had emerged in 2021 and investors have been able to step in and pick some of the top tech firms, such as Tesla at lower valuations.
To achieve a long-term gain in the stock market, investors should know that there is no shortcut to achieve the returns of hedge fund gurus like David Tepper and Carl Icahn. The following are two platforms that can get retail investors onto a path of healthier financial investments.
Simply Wall Street
Simply Wall St is an example of a platform that can help the new age of retail traders achieve solid investment returns. Simply Wall St is a financial technology firm that provides stock research and visual analysis tools for individual investors. The company was founded with the goal of helping retail investors make more informed decisions in their investments.
Simply Wall St provides a wide range of features, including stock research reports, historical data, and company reports, to help investors assess a company’s health.
The company’s unique selling point is easy-to-understand visuals which can show investors at the click of a mouse whether a stock is undervalued, or whether it has control over its debt, for example.
Check out our in-depth review of Simply Wall St.
FinViz is an online stock screening, research, and visualization platform that provides various investment tools.
One of the key offerings is its powerful stock screener where investors can apply filters to the market and its sectors or bring up a visual of a company’s financial metrics. This is a tool for the more advanced investor who wants to learn more about the professional investor’s toolkit with metrics such as price/equity valuations and institutional ownership.
However, the GameStop era was created by a real imbalance in long and shorts and investors can still use the metrics for short interest to find the next short squeeze opportunity. With these tools, investors can leave the online forums behind and find some quality stock ideas to supercharge their investment portfolios.
Jeremy Biberdorf is a long-time internet marketing pro turned online entrepreneur and blogger. Check out his investing blog at Modest Money.
© YFS Magazine. All Rights Reserved. Copying prohibited. All material is protected by U.S. and international copyright laws. Unauthorized reproduction or distribution of this material is prohibited. Sharing of this material under Attribution-NonCommercial-NoDerivatives 4.0 International terms, listed here, is permitted.