Retail investors may be back at it in US tech shares.

You don’t so much need any analyst to tell you that. You could just have a look at the performance of America’s mega-cap tech champions in 2023, and particularly how the shares have traded recently around the burgeoning A.I. mania.

But, for what it’s worth, JPMorgan’s Nikolaos Panigirtzoglou pointed to a hodgepodge of evidence and indicators which together suggest “the retail impulse into tech stocks has reemerged.”

The figure below shows a 90-degree ascent in tech ETF flows. Panigirtzoglou pointed specifically to popular index products from Vanguard and Fidelity.

Recall that the latest EPFR data showed the largest one-week buying impulse in tech-focused equity funds in history+, some $9 billion.

In addition, JPMorgan’s weekly proxy for small traders’ equity call option flow bounced meaningfully last month. The measure tracks small-lot call option buying, which has “increased markedly in recent weeks,” as Panigirtzoglou put it, calling the jump evidence of  “the retail impulse by younger cohorts of investors who tend to use leverage.”

As you can see from the figure on the left below, we’re nowhere near the kind of retail frenzy seen during the meme stock mania, which crescendoed in early 2021 with the GameStop fiasco.

Somewhat amusingly, JPMorgan also proxied retail behavior using a 50% Nasdaq / 50% Russell 2000 portfolio. The thesis is that small investors inadvertently employ a barbell strategy through their affection both for flashy gains in mega-cap tech stocks and underdog small-caps.

That accidental barbell outperformed the S&P dramatically beginning in the summer of 2020 (i.e., as the stay-at-home trade took flight) and lasting all the way until the onset of Fed hikes early last year, buoyed at various intervals by the ebb and flow of intermittent tech rallies and fleeting bouts of meme stock fireworks.

Indexed to the beginning of January 2020, the retail barbell and the S&P are now running neck and neck, but if you squint at the figure on the right above, you can see the retail 50/50 strategy moving ahead over the last two weeks, which Panigirtzoglou said is likewise indicative of “re-risking by the younger cohorts.”

Imagine the future: The A.I. revolution creates a GDP and productivity boom, even as it puts millions of people out of work. The odd juxtaposition between high human unemployment and a highly efficient economy firing on all cylinders gives lawmakers scope and motivation to implement UBI (i.e., permanent “stimmy”), which in turn affords the jobless an opportunity to make monthly investments in A.I. stocks.