Transcript:
Tom Vaughan:
Hello, everybody, welcome to Wednesday. The S&P 500 was down .1%, today. It really was not a terrible day at all, it was mostly up, and was only down right at the end. But the thing I found very interesting about today, was a report that came out talking about individual investor participation. So, just a little bit of history. We kind of divide things into two groups, the individual investor, and the professional or institutional investor. And the individual investor came on really strong last year. People didn’t have things to do, and they started to get involved with the stock market, and it was fantastic. We ended up having a great year, and there seemed to be a lot of interest in kind of companies of the future, innovative technology and genomics and clean energy and those types of things.
So, we saw a great run up in those, and then all of a sudden, about February, mid February, it started to fall off. Well, if you look really closely, you can see what was going on, was that the increase in interest in cryptocurrency picked up at roughly the same time. And so, I believe that people that were individual investors moved from, kind of in the stock market and ETFs and those types of things, to the cryptocurrency and with the thought process being, “hey, if this thing’s gonna go up, and up and up, I could make a lot more money there,” and that’s kind of the object. And so in the end, what did happen, though, on Friday, we saw the $2.1 billion came from individual investors, right? That’s the record, highest amount of money that has been purchased in the stock market by individual investors, in any one day. And so again, last year, it was 36% of the trades, were individual investors, huge number. By February and March, it had dropped down to 18%. Again, I think they were going off, and now they seem to be coming back. And we’re seeing some of those same areas that they liked before, start to do quite well. So for example, our clean energy piece that we have in our models, was up 2.7%, today, even though the S&P 500 was down .1%, so, you can kind of see what’s going on.
But having said that, you still probably need, and this would be my recommendation, a pretty well balanced portfolio, which we’ve been doing over the last two weeks, is balancing out kind of the reopening stocks, and these kind of future innovative stocks, and then having a really big piece of just a total stock market, owning everything, as far as that goes. Because if you look at Monday, the reopening stocks were hot. And again, that would probably be the institutional managers that are coming in and buying reopening stocks, just partly because they like that, they like value, they like to see earnings and revenues and such and track records and whatnot. And they’re sitting on, institutional investors, are sitting on near record amount of cash, so they can come in and drive that side of the market. And now we seem to be getting more and more of these individual investors back and are probably more interested in that other side.
It seems to almost be going back and forth by the day. So, balancing that out, having a total stock market index, I think is the only way to play this. Maybe something comes along, and creates a trend at some point, and we’ll have to figure out what to do with that. But at the moment, they don’t see a strong trend at last for more than a few days. Although we have been slowly but surely seeing kind of this innovative area really pick back up for the last say three weeks, so we’ll see how that plays out.
Really interesting. I’m really happy that you know, if people are coming back from the cryptocurrency area, back into the regular stock market, I highly encourage that. I mean, I lived through the 2000 downturn, the 2008 downturn, I’m still here. And one of the things that I do, is that I work on trying to hit singles and doubles, all the time. Once in a while, try to get a triple and usually that’s just luck, because something worked really well. And I don’t try to hit home runs all the time, and that’s how you sustain. That’s how you stay, you build wealth. I have hundreds of clients that have done the same thing, that are all sitting in a really nice retirement or looking forward to really nice retirement.
You don’t have to have this crazy situation of making tons and tons of money, because a lot of times homerun hitters are also the highest strikeout percentage, in the major league. So, I think that’s a little something to think about. I have seen people that have bought and hold stocks that have turned into millions of dollars, too. I don’t know that it’s necessary. I would love to see myself, buying some cryptocurrency, and making millions of dollars. But, my more reasonable expectation is that, those types of things haven’t worked out in the past. It’s a lot like if you look back at what was happening in the 2000 upturn, people were buying these dot.com stocks that didn’t have any earnings, no revenues, no nothing. That’s a lot like cryptocurrency to me. And all those people got wiped out.
So, that would be my main concern here, is just kind of going down the steady path, and building wealth, and you can end up with something that’s very spectacular, just dealing with the regular stock market. With companies that have products, and employees, and customers, and revenues, and hopefully even some profits. And so, anyway, that’s my outlook on those things. I think it’s different. I have no problem with cryptocurrency, and I have no problem claiming that; just kind of keep your bets kind of small, would be my outlook there.
But nonetheless, we’ll see what happens. It looks like some people might be coming back, which I’m super excited about. The individual investor was a huge driver last year. It would be great to have him back for the second half of this year, because we might be able to see some really good returns, and all of us can create some more wealth for ourselves here too, if we get that going, so. Anyway, look forward to talking to you tomorrow, and I would really be happy to see what’s gonna happen here, coming forward. It’s gonna be very fascinating timeframe. Thank you very much.