Ordinary people are piling into the stock market, snapping up shares of well-known companies like Tesla and Apple with a few taps on their phones. The influence of these app-wielding investors on the $30-trillion US stock market is still being debated, but in the meantime they are proving to be very lucrative for professional traders.
Brokerages reported a swell of new account openings as much of the global economy went into lockdown, causing stock markets to swoon. Several factors may be underpinning the surge in new retail traders:
- Buying and selling securities has never been easier, with slick smartphone brokerage apps just a download away.
- Late last year a price war between companies like Charles Schwab and Robinhood drove commission charges to zero, as brokerages lean into other, more controversial, ways of making money.
- Interest rates have plunged as central banks like the Federal Reserve do everything they can to keep their economies churning. With so little money to be made on bonds, the stock market may seem like the only way to go.
- Some investors likely saw the downturn as a chance to get stocks on the cheap.