Finimize - 🌡️ Taking your temperature

What’s going on here?

Exclusive data from the Modern Investor Pulse showed that retail investors are the most optimistic they’ve ever been.

What does this mean?

Finimize spoke to thousands of retail investors from its million-strong global community and learned that a record 76% of you believe global stock markets will be higher in a year. With many of the world’s biggest stock market indexes hitting new peaks, that might be why 65% of you plan to put cash into stocks. Nvidia was the top choice, followed by other AI-linked Big Tech giants. But the tech trend only went so far: just over a quarter of you plan to invest in crypto, despite 61% believing bitcoin will be higher in a year.

Why should I care?

For you personally: From small acorns, mighty oak trees grow.

Over 40% of you said you plan to invest at least $10,000 in the next year, with older investors having more moolah set aside. But younger Finimizers showed they’re pretty flush, too. Nearly 30% of under-25s have between $1,000 and $4,999 ready to invest. The Pulse also showed that almost 60% of first-time investors started with amounts between $10 and $1,000. If that’s you, you might be encouraged to know that a third of investors who plan to invest more than $10,000 this year started off with an investment of less than $500.

For markets: Wakey, wakey.

Interest rate cuts across Europe, the UK, and the US this year mean folk will earn less interest from their savings accounts, creating an opportunity for investment platforms to make their case. But they might need to work on their technique: only 15% of first-time investors started after seeing content produced by a financial institution. And just 20% of you believe your investment platform provides all the information needed to invest. Now, if only there were a daily newsletter that could help…

What’s going on here?

Investment platforms like Robinhood have been offering retail investors round-the-clock trading of US stocks – and some professional investors are on edge.

What does this mean?

Traditional US stock markets are open to all investors Monday to Friday, 9.30am to 4pm – New York time. But if you’re a pro, there are also “pre-market” (4am to 9.30am) and “post-market” sessions (4pm to 8pm) that can be a wild few hours to trade. For example, a US company might report seemingly weak earnings after market close, causing a post-market drop of, say, 10%. But after a positive investor conference call from the company later in the day, the stock could swing to open 2% higher by morning. Investors want in anyway, though, enticed by the opportunity to make more money.

Why should I care?

For you personally: David versus Goliath.

Naysayers argue that round-the-clock trading makes US stocks even more appealing, at the expense of other markets. There’s also a risk that ne’er-do-wells try to manipulate the market by pumping up prices during these lower-activity (a.k.a. illiquid) periods and then selling, profiting at the expense of retail traders. But some of the dissent might just be the establishment trying to outmuscle smaller platforms. There was an outcry when zero-commission trading was introduced, after all. Just be wary of trading all hours: big market swings are dangerous things, and constantly checking the markets could affect your mental health.

For markets: Gathering no moss.

This change has been building for years. Currencies and US government bonds are already traded 24 hours a day, five days a week – and with crypto, throw in weekends too. Stockbroker TD Ameritrade let investors trade certain exchange-traded funds non-stop back in 2018. Plus, US regulators are already considering an application for the first 24-hour stock exchange, which would be a big move in the direction of non-stop trading.