"US Retail Investors Lose All Gains Made During COVID-19"

Wall Street Sign, AP = Yonhap News

During the COVID-19 pandemic, individual investors who led the 'meme stock' craze (stocks that gain popularity through online word-of-mouth and attract many investors) in the U.S. stock market have recently lost all the profits they had made amid the recent market downturn, according to an analysis.

On the 8th (local time), Bloomberg reported that Morgan Stanley analyzed trading data from accounts opened since 2020 and exchange data, finding that individuals who entered the stock market after COVID-19 lost most of their profits due to the market decline that began at the end of last year.

Although meme stocks favored by individual investors experienced significant price drops, they were slower to react compared to institutional investors, resulting in greater losses.

For example, AMC Entertainment, a representative meme stock and movie theater chain, saw its stock price fall by about 49% this year. Peloton, a home fitness company considered one of the biggest beneficiaries of COVID-19, also saw its stock price drop by more than 90% from its peak.

However, Bloomberg Intelligence explained that these investors have not significantly reduced their stock investment proportions despite the ongoing market downturn.

Last month, individual investors’ net monthly stock purchases amounted to $14 billion (approximately 2.6347 trillion KRW), the second-lowest since the end of 2020, but they still hold a higher proportion of stocks compared to institutions.

On the other hand, institutional investors such as hedge funds are actively reducing their stock holdings, with hedge funds cutting their stock proportions to the lowest level in two years amid the interest rate hike period.

Matthew Tuttle, CEO of Turtle Capital Management, explained that many individual investors "started investing in stocks during the COVID-19 era and have only experienced the crazy market supported by the Federal Reserve (Fed)."

This content was produced with the assistance of AI translation services.