Retail investors awakened by Covid-19 slump

Wider variety of investors with sharply different perceptions and tolerance for risk could be beneficial for the market

Ben Paul

Published Sun, Jul 5, 2020 · 09:50 PM

THEIR absence is lamented. Yet, their presence elicits bewilderment, worry and even ridicule from market commentators.

They are referred to as retail investors, or mom-and-pop investors. But the context in which these terms are used often leaves no doubt as to the underlying pejorative meaning.

These investors are regarded by the financial industry as fickle and uninformed. They take too much risk for too little potential return. They sell winning stocks too fast, and hold losers too long. They create pricing anomalies that the market would be better off without.

In short, they are the dumb money.

Yet, retail investors now appear to be confounding professional money managers. According to data from the Singapore Exchange, retail investors have been big net buyers of local blue chip stocks since the market hit its …