(Bloomberg) --
The shift to commission-free trading and the stay-at-home environment of 2020 helped usher a new army of day traders into the stock and equity-options markets. How will this influential cohort affect markets now that they account for a share of volume that rivals hedge funds?
Liz Ann Sonders, chief investment strategist at Charles Schwab, joins the latest “What Goes Up” podcast to discuss this, the upcoming elections, and other market topics. Some highlights of the conversation:
“What we don't know is if we get into any significant market corrective phase… whether they get beholden on the long side, which was what happened in September, or they get scared out of the market, if the pain is more severe than what we experienced? Or do, they just shift gears and start doing the same thing on the put side of the options equation as they did on the call side. So we don't know. What I will say is the kind of speculative froth we're seeing among that cohort is not matched by other measures of investor sentiment, either attitudinal or behavioral. So we don't have the same kind of speculative fervor, whether it's in attitudinal surveys like AAII or other measures that I think are tracking more of what either older individual investors, not traders, are doing, or across the spectrum of institutions.”
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