Who should be afraid of the bubble on the US stock market - millionaires or small investors?

In the second half of January, the industry media reported on a potential speculative bubble or a situation very close to uncontrolled market overactivity. So far, there is no question of a collapse or a crash, but it must be admitted that the brokerage community is already sounding the alarm. Stoic peace, on the other hand, is maintained by investors with billions of millions of dollars, although smaller players are at the same time (and their future is somehow at stake).

Millionaires about the stock market

2020 ended with huge gains across the US stock market as the Dow Jones gained 7,3%, the S&P 500 grew 16,3%, and Nasdaq recorded a record 43,6 percent. These were the highest promotions in history, and players started a discussion about the reasons for the trend. The most confusing among investors was caused by the E-Trade Financial survey, according to which only 9 percent. of respondents consider the specter of a bubble to be an extremely distant scenario. 16 percent stood in opposition. supporters of the theory of an already dominant speculative tendency, and 29 percent. believes that the stock exchange is bound to strive for such a variant.

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Interestingly, the largest percentage, 46 percent. of respondents think that the January situation resembles "something like a bubble", although it is not a bubble itself. Who can come unscathed out of an uncertain aura? Millionaires can benefit a lot from the trend. According to January declarations, 2/3 of the holders of at least million bills want to play the bull strategy. The most realistic scenario, however, is to hold assets as, according to E-Trade Financial, most millionaires see a still dynamic growth trend. Unfortunately, it was not without controversy.

Giants are no longer tempting

At the end of the current quarter, the estimated advance is expected to oscillate around 5 percent. The reasons? Mainly two: President Biden's stimulus package worth 1,9 trillion

Grzegorz Szulik, Provema

dollars, and a vaccination program that is capable of restoring a relatively stable US economy. On the other hand, we observe a significant shuffling of assets among over 30 percent. investors who see higher rates of return for smaller companies and sectors with a sudden but significant short-term decline, such as finance and energy.

Mike Loewengart of E-Trade Financial goes even further as he considers all other options to be more profitable than the long dominant big-tech. However, the stairs began in February, when a wider group of observers - including people not previously related to the stock exchange - began to pay attention on the case of GameStop. When the units cost $ 2020 in August 4, no one expected eight-fold jumps. It was mainly smaller investors that benefited from the growth, although at some point the “elite” entered the game.

The stock market a bone of contention?

The stock market is not a space for everyone, and the GameStop experience has shown that when big money is at stake, American bigheads can fight for theirs. In the period from January 21 to 27, the company recorded jumps from 43 to nearly $ 350. At one point, brokers froze the deal of smaller investors to find room for larger players, which not only circulated the US stock market environment, but also caused quite a stir in Congress. The media started asking politicians about potential stock market regulations. Answers - so far no answers.

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The GameStop experience and the clear clash between millionaires and smaller investors have clearly polarized the approach to the stock market. According to recent reports Morning consult, 70 percent millennials recognize the capital market as a place unfavorable for individual investors. Potential regulations for Wall Street, in turn, were applauded by 45 percent. respondents. Will it end with the announcements? There is no shortage of optimists - 47 percent. of respondents believe that the situation in January and February may be the beginning of facilitations for smaller investors who want to accumulate capital at more attractive rates of return than in the case of traditional deposits.

The recent months for the US stock market may be the beginning of an interesting turn towards a slightly more pro-consumer philosophy of Wall Street. Although it sounds like a naive prayer for a revolution in favor of individuals, the very awareness of individual players about the regulations of the stock exchange is optimistic. Remember, however, that we are talking about Americans who have the stock exchange in their bloodstream. I am curious when the time will come in Poland for the increased awareness of both smaller players and the pro-competitive nature of the larger ones.

Source: Press release. Author: Grzegorz Szulik, president of the Polish fintech Provema