NewsWire: 8/3/21
- According to a new survey, nearly half (49%) of those who day trade have been doing so for two years or less. These people are highly engaged in their transactions--and highly stressed about their finances. (Betterment)
- NH: During the lockdowns, many Americans--most of them young--used their free time to explore the world of day trading. Early this year, the roller-coaster rise of meme stocks (tickers that are virally impacted by social media buzz) brought even more people to the table.
- According to a new Betterment survey, almost half of day traders are new to the game. 19% have been trading for less than a year. And 30% have been trading for only 1 or 2 years. While the poll doesn't publish age breakdowns, it can be inferred that at least 80% of the respondents are Millennials.
- So what motivates them? 58% say they began investing because they believed they could make money fast. And 43% said they began because it’s entertaining. Of those who said they started for fun, 52% said it replaced hobbies canceled due to Covid-19.
- As meme stocks made headlines, day trading got an extra boost. According to the survey, 67% of day traders bought "popular retail stocks" in January or February 2021. But only 51% of traders said they actually understood the reasons why meme stocks rose or fell during that period. In other words, roughly half the traders didn't know why GME and AMC were skyrocketing but jumped on the bandwagon anyway.
- Of those who sold their meme stocks, most reported making money. 44% say they sold for a complete profit. 54% sold for both a profit and loss. Only 2% sold for a complete loss. (We're not looking at their brokerage statements, so whether you entirely believe this is up to you.) It also seems that most expect to keep making money. 55% are still holding on to their investments. And 87% say they will continue trading trendy tickers.
- Most of these investors are also highly worried about their finances. 64% of traders report being either very or somewhat stressed about their finances. And 69% of Millennials traders say the same thing. (Remember: Millennials make up the vast majority of these respondents.) This makes sense. Most young adults have little net worth and limited cash savings.
- So what do I make of this poll? As I mentioned last week, many Millennials engage in day trading a bit like they play Candy Crush. Just like the typical mobile game, apps like Robinhood are designed to deliver frequent dopamine rushes to users who obsessively "check in." (See “Most Retirement Savers Playing It Safe.”) Investing can therefore encourage constant engagement even when it's not for high stakes. As other sources have pointed out, meme traders aren't investing large amounts of money--usually less than $250.
| To view and search all NewsWires, reports, videos, and podcasts, visit Demography World. For help making full use of our archives, see this short tutorial. |
