If you were wondering whether we will ever tire of lampooning retail investors for piling into stocks “like nothing anybody’s ever seen” (to quote Trump) in January, the answer is: “absolutely not”.
And see it’s not so much that the timing was horrible as it is that the writing was on the wall. Bad timing isn’t the exclusive domain of morons. If you go to the gas station to buy a gallon of milk and it gets robbed while you’re in line, well you’re not a moron, it’s just that the timing on your milk run was bad. On the other hand, if there was gas station crime wave going on in your area and you decided to get your milk from the gas station at 2 in the morning, well then you’re a fucking moron because the writing was on the wall. See how that works?
Same thing with U.S. stocks in January. Even a cursory look at the fundamentals should have been enough to deter someone from diving in (that absurd spike in year-ahead earnings estimates catalyzed by the tax bill notwithstanding) and if you were utterly incapable of understanding the fundamentals, really all you had to do is look at a chart to know that maybe – just maybe – you’re getting in at the top.
But manias have a way of attracting morons and as we detailed just days before it all fell apart, Millennials were opening retail brokerage accounts at a rapid clip in order to trade crypto and weed stocks.
Literally one night before it all started to go horribly awry, we showed you two more charts that suggested retail investors were likely piling in.
There was this one, which betrayed a nearly 50% y/y rise in client activity at TD:
And this one which speaks for itself:
Well now, thanks to the latest monthly activity update from E*Trade, we know that everyone’s favorite discount brokerage (when it comes to being the poster child for retail stupidity) added 64,581 gross new brokerage accounts in January, the most for a single month since September of 2016:
How’d that work out for you?
Did you buy a yacht yet?