Main Street investors are running the show this year, not Wall Street
Institutional investors are once again playing catch-up with retail traders, according to JPMorgan. Mom-and-pop retail investors have bought newly crowned meme stocks such as Opendoor for months, according to the Wall Street investment bank. But only recently have big investors also jumped into this trade. The bet has paid off. After seven straight losing months, Opendoor posted a dizzying rally of 245% in July, and is up another 30% so far in August. OPEN 3M mountain OpenDoor shares over the past 3 months This marks only the latest example of small investors leading the charge this year, according to Arun Jain, a global markets strategist at the bank. “As an interesting pattern within ‘Meme’ stocks … retail buying in prior months is followed by non-retails joining the trade more recently,” Jain wrote to clients in a Wednesday note. “This is in line with our reading on the broader market.” Jain also pointed to retail investors “buying the dip” following President Donald Trump’s initial wave of higher tariffs in April. Those investors benefited when stocks rallied after Trump later said he would delay many of those charges. The S & P 500 has jumped almost 19% since the closing low on April 8, less than a week after the original tariff announcement on April 2 . .SPX 6M mountain The S & P 500, 6 months Big investors aimed to regain ground via higher-beta plays, Jain said. As a result, he found high-beta crowding to be at an all-time high and thinks this corner of the market could be due for a pullback. Right now, retail traders are showing a preference for exchange-traded funds such as the SPDR S & P 500 ETF Trust (SPY) and SPDR S & P 500 ETF Trust (QQQ) over single stocks, according to JPMorgan data. But not all ETFs are getting the same treatment. Jain said the iShares Semiconductor ETF (SOXX) and the Direxion Daily Semiconductor Bull 3X Shares (SOXL) ETF were both among the most sold on a net basis over the past week.
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