U.S. stocks have fallen recently, testing investors’ confidence in “buying the dip”. However, some data show that when U.S. stocks fell sharply last Thursday (5th), the single-day net buying of retail investors hit a record high.
According to data from Vanda Research, the S&P 500 tumbled 3.6% last Thursday, one of the biggest declines this year, with retail investors buying nearly $2.6 billion in net purchases of U.S. stocks and U.S. stock ETFs on that day, hitting a new single-day high .
The report pointed out that the S&P 500 pulled back from its highs and fell into correction in March, but it did not seem to shake the confidence of retail investors to buy on dips. In March alone, retail investors’ net purchases of U.S. stocks and U.S. stock ETFs reached about $28 billion. , set a new monthly high, and the net purchase in April also reached 24.4 billion US dollars.
Retail investors appeared to continue to support the market amid volatility in U.S. stocks. John Case, a 71-year-old retired engineer, said he has been following Buffett’s advice that “I am greedy when others are fearful” and holding stocks for the long term. Many retail investors believe that historically, stock prices will eventually rise.
Many investors who bought the dip today are losing money due to the dire market conditions. Jason Goepfert of Sundial Capital Research said 2022 has become one of the worst years for bargain hunting since 1974.
Still, a survey by The American Association of Individual Investors showed that retail investors’ stock allocations in their portfolios climbed to nearly 70% in April, hovering near levels not seen since early 2018.
Rosenberg Research economist and strategist David Rosenberg suggested that investors should sell the rallies rather than buy the dips, predicting that value stocks, gold, utilities and energy will be winners, at least in the short term. And U.S. stocks as a whole will return below average.