Is retail investor surge cause for caution?

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With a combination of resurgent markets, seemingly ebullient retail investors and a bleak economic outlook, it may be prudent to tread carefully.

It’s an old investment cliché that when your taxi driver starts giving you share tips, it’s time to sell.

As someone who has been on the receiving end of cabbie investment advice during both the dotcom and – more recently – bitcoin bubble, I can attest to there being an element of truth to the old adage.

Perhaps the Covid-19 lockdown equivalent is when I read some of the comments below articles on news websites, and often see people saying that maybe they should buy Amazon shares given the number of deliveries everyone is getting.

Amazon – and indeed the other FAANGs (Facebook, Apple, Netflix and Google) – have led the sharp market recovery since the Covid-19 collapse, taking their valuations back to elevated levels. Amazon’s share price rose 52% since 23 March to 4 June, during which time the S&P 500 index of shares has gained 42%.

Retail investors may have played no small part in this almighty market rebound.

View Full Article – published by Schroders on 12th June 2020