With a confluence of factors affecting the economy and markets, not since the 1990s have so many retail traders taken to day trading, with their influence contributing to market fluctuations lately.
As the coronavirus has driven many workers to shelter-in-place, a lack of activities such as sport-betting, and other traditional speculative activities may be driving investors to play the stock market instead.
While professional investors exited the stock market amid the coronavirus pandemic, sports bettors and bored millennials have climbed aboard the retail train, encouraged by zero dollar commissions, hopes for a v-shaped recovery, and a lack of other outlets like sports betting, which were shuttered due to the Covid-19 pandemic.
Online brokerages have witnessed a burgeoning of new accounts this year, with retail outlets E-Trade, TD Ameritrade, Charles Schwab, and Interactive Brokers executing as many trades in March and April as in the whole first half of last year, according to public disclosures.
Marc Rubinstein, the author of the newsletter Net Interest, notes the explosion in Robinhood accounts and its correlation with millennials who enjoy sports betting.
According to Rubinstein, “43% of North American men aged 25-34 who watch sports also bet on sports at least once per week, and that’s the same group that has flocked to Robinhood.”
“On the basis that their customers love sports betting, there’s something meta about DraftKings itself having worked its way into more Robinhood portfolios than practically any other stock over the past month,” he added.
Underscoring this trend is the latest comments from Barstool Sports founder David Portnoy, who recently claimed he is better than Warren Buffett at trading, just prior to the market tanking over the last week.
I’m sure Warren Buffett is a great guy but when it comes to stocks he’s washed up. I’m the captain now. #DDTG pic.twitter.com/WqMR89c7kt
— Dave Portnoy (@stoolpresidente) June 9, 2020
Barstool which has had a daily gambling radio show for some time recently adjusted its moniker from “Picks Central” to “Stocks Central,” another example of how the two worlds are colliding.
“For a gambler, investing has a ton of similarities,” said Barstool Sports founder Dave Portnoy, who has begun streaming his day-trading sessions for an audience that normally consumes sports betting content.
The esports world has also been a hotbed of activity during the pandemic. Roundhill BITKRAFT Esports & Digital Entertainment ETF (NERD) is up 2.24% today and has been on a tear since March, having gained more than 52% since then.
Meanwhile, while retail traders have flooded markets lately, BofA’s Bull & Bear indicator rallied from its lowest possible level of 0.0, where it had been since March 25, climbing 0.4 last week, to show that there may be interest from professional traders finally, although still indicating a dearth of institutional investors buying stocks.
For more market trends, visit ETF Trends.