(Bloomberg) -- The gyrations across equity markets aren't enough to deter individual investors who continue to pile in billions of dollars.
Retail traders bought $1.51 billion of equities amid Monday's rout, bringing the total to roughly $12 billion since Russia's invasion of Ukraine, according to data compiled by Vanda Research. Individuals are betting on a return to recent highs for stocks, stomaching the volatility that's swept across global markets and pushed hedge funds to become sellers.
“In equity markets we have seen further de-risking from hedge funds,” Vanda's Ben Onatibia and Giacomo Pierantoni said. “Retail investors have continued to buy the dip with conviction. While the risk of capitulation remains, hedge-fund positioning has become so bearish that the risk-reward of holding equities is skewed to the upside.”
The retail crowd has added to bets on some of the world's largest exchange-traded funds like the SPDR S&P 500 ETF Trust (ticker SPY), the Invesco QQQ Trust Series 1 (ticker QQQ), and the more volatile ProShares UltraPro QQQ (ticker TQQQ). Buying across the major U.S. benchmarks has come amid wild swings, with the S&P 500 Index moving by more than 1% in five of the sessions since Russia invaded Ukraine on Feb. 24.
Fidelity customers have stuck to snapping up shares of technology giants like Tesla Inc. and Apple Inc. while adding to levered bets on technology stocks via TQQQ. That demand mirrors optimism being expressed on popular day trader platforms like Reddit's WallStreetBets and Stocktwits.
The buy-the-dip crowd hasn't been pushing money into the market without caution. Sentiment on WallStreetBets shows investors are on high alert for further pain, with mentions of put options on the SPY and QQQ notably higher than those for call options, a favorite of day traders, according to data compiled by alternative markets data aggregator Quiver Quantitative.
Markets slumped again after Monday marked the biggest drop for the S&P 500 Index since late October. As of 10:53 a.m. Tuesday in New York, the Dow Jones Industrial Average was down 0.3% while the Nasdaq 100 fell 0.8%.
“Retail clients have been more aggressive buyers of this dip,” said Jill Carey Hall, an equity strategist at BofA, “potentially on fear of missing out on what has generally been a successful strategy post-crisis.
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