Investing
Robinhood Users Weren’t as Reckless as Portrayed During Rally
- Working paper finds main retail trader holdings aren’t crazy
- Individual dip buying likely eased, not aggravated, stocks
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Bankrupt companies, obscure electric-vehicle makers, options fliers, SPACs -- each has captured the attention of Robinhood users this year, prompting mockery and taunts from professional investors.
But the image of the investing app’s clients spending their days loading up on fad stocks doesn’t accord with reality, according to a new working paper published by the National Bureau of Economic Research titled, “Retail Raw: Wisdom of the Robinhood Crowd and the Covid Crisis.” Rather, it seems, the typical Robinhood user’s portfolio is kind of boring, and evidence shows these small traders helped stabilize markets during the Covid-19 crash.