More than half of individual investors believe that the stock market is against them
It is not an investment that is viewed with skepticism, but the system.
According to a survey by Bankrate, more than half (56%) of people who have money in stocks believe the market is against individual investors. This compares to 41% of non-investors who say the same thing.
“Some of that may have to do with expectations,” said Greg McBride, a financial analyst at Bankrate. “Newer investors may be trying to make big profits or improve the market over time, and the chances of long-term success with those efforts are not.”
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At the same time, private investors treated hedge funds and other discerning or wealthy investors differently, for example early access to IPOs and better trade execution.
“Newer investors see these things and that can cast doubt on the integrity or fairness of the markets,” said McBride.
The survey of 2,525 US adults was conducted in late February, about a month after a surge in so-called meme stocks, including Gamestop, whose share price peaked at $ 347 on Jan. 27, after trading at $ 31 two weeks earlier would have. The surge was attributed to an army of Reddit investors who forced hedge funds, relying on the stock slump known as short selling, to buy stocks at a higher price instead.
In the midst of the frenzy, Robinhood, the popular trading application used by individual investors, restricted trading in Gamestop and a few other stocks. The company has been accused by its users and lawmakers of protecting hedge funds that have been short sellers of these stocks. Robinhood said the move was taken to meet regulatory requirements for financial reserves and not to benefit a particular group of investors.
The Bankrate survey also looked at how individuals are investing now compared to before the pandemic.
“What we saw was that Reddit users were twice as likely to invest more than less than they did before the pandemic,” McBride said.