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Return of the Day Trader

Much has been written about the GameStop affair and how a network of individual investors succeeded in pushing up the share price and bludgeoning professional “short sellers”. Melvin Capital, a well-known hedge fund, lost over 50% in one month, approximately $6 Billion, mainly shorting GameStop.

With little to do during this pandemic, a new generation of young adults has a newfound interest in the stock market. Too much euphoria however is encouraging speculation. Moreover, the retail frenzy to buy stocks is a phenomenon typically observed at market tops.

On the other hand, some professional investors, such as hedge fund and pension managers, have been net sellers. Still, with money from day traders destined for the stock market, the bull market may continue to run.

Interestingly, according to a survey of retail stock investors by E*Trade, almost three-quarters of individual investors agreed the stock market is either “fully in a bubble” or “somewhat in a bubble”. Sentiment is also very positive towards the stock market and the majority does not want to miss profiting from the “bubble”. According to data from VandaTrack, over $1 billion is being invested into stocks on a daily basis.

Equity markets in both Canada and the U.S keep moving higher. There appears to be no apprehension of rising global Covid-19 case counts, nor the spreading of new variants. The vaccines are winning the sentiment race as investors believe the reopening of the economy is a given and is right around the corner.

The difference between day trading and professional asset management is likened to the difference between building a treefort for your kids and building a house for your family. 

Day trading can be a rush and, if you are making money, you’ve got something to brag about. For true wealth accumulation though, look to the services of an asset manager. Stonebrooke Asset Management takes a disciplined, balanced approach to control portfolio risk for long term growth and downside protection.

We're here to help. Contact us to learn more at info@stonebrooke.ca 

This article is provided for information purposes only. Although the content is believed to be reliable when posted, Stonebrooke Asset Management cannot guarantee this information is current, accurate or complete and does not assume any liability. The information is not intended to provide any insurance, financial, legal, accounting or taxation advice and should not under any circumstances be relied upon without consultation about your specific situation. The information is subject to modification and updating from time to time without notice. 

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