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(Bloomberg) -- The retail traders who have stormed the markets in recent years were among the only investors buying on Thursday as US stocks had their worst day since June 2020.
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Small investors piled into many of their favorite assets, including Nvidia Corp. and the exchange-traded fund Vanguard S&P 500 ETF, as they bet that the market’s latest tumble will provide another contrarian opportunity for long-term gains, according to data tracking the users of Fidelity Investments’ brokerage.
Amazon.com Inc., Apple Inc., Meta Platforms Inc., and Microsoft Corp. were some of the most actively-traded individual companies among Fidelity users, with these stocks seeing five to eight times more buy orders than sell orders.
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“Even if it keeps going lower, buy more to lower your cost average,” said Pedro Correia, a 30-year-old freelance software developer who said he has been reading financial books as he builds his own retirement portfolio. He bought shares of Amazon, Google and ASML Holding NV this week. “Ten years from now it’ll be higher, so the cheaper it gets the happier I am, because I can buy more.”
Through the first three hours of trading, retail investors were net buyers of $2.8 billion in stock, the second highest level on record since JPMorgan Chase & Co. began tracking the data a decade ago, according to Emma Wu, the bank’s global quantitative and derivatives strategist. The buying ranged from ETFs to single stocks, with ETFs tracking the S&P 500 seeing the same level of inflows as Nvidia and Tesla Inc. combined.
The buy-the-dip mentality has long reigned supreme among individual investors who lean into the notion that markets will inevitably go higher in the long term. During the market selloff in the early days of the Covid pandemic, the retail crowd was one of the only investor groups that was buying as others sold, and many ended up benefiting from that decision.
This line of thinking faced another test on Thursday when losses accelerated around the globe after President Donald Trump escalated a trade war beyond what Wall Street had anticipated.
Professional investors did not share in the optimism. Money managers rolled back exposures to US equities to levels not seen since November 2023, according to a poll by the National Association of Active Investment Managers. Meanwhile, hedge funds dumped global stocks at the fastest rate in 12 years in March, according to Goldman Sachs Group Inc. data.