00:00 Speaker A
Dave, give me some names that that might be able to uh be purchased by the retail investor and in some cases they like those stocks below $100.
00:11 Dave
Yeah, well, it’s it’s interesting. So, retail investors actually were the largest source of demand for US equities last year. They’re actually forecasted to be the largest source of demand again in 2026, according to JP Morgan analysis. And to your point, um if we actually take a step back and see, well, what was retail buying? Of course, um they were buying broad-based ETFs, um the record numbers that you’ve mentioned a moment ago. Um but we’re actually seeing the retail investor expand from the tried and true names, like the magnificent seven stocks, your Nvidias and your Teslas and your Alphabet, but now into other areas, right? So, uh there are some kind of what I’ll call frontier themes uh that were of huge interest to retail investors last year. Things like memory, they were early on a company like Sandisk, also quantum computing, nuclear. Um so I think retail investors are looking for two things. One, sort of the safety or potential safety that uh companies with huge moats can continue to grow and grow their revenue and earnings consistently with high margins, but also for new ideas that have the potential for outsize performance, um which is one of the reasons why I think uh the retail investor base can no longer be thought of as just someone who’s going to be pushing around a stock like GME or AMC or just kind of plowing into uh broad-based indices. They actually have sort of uh influence across a diverse range of names and sectors.
01:54 Speaker A
Dave, I’m glad you brought up influence because I agree with you. You know, 5:00 a.m. this morning, I put a very long post on my LinkedIn account, shouting out retail investors. And you know, when I talk to CFOs, head of investor relations, Comms pros, all that group, they continue to really discount the influence of retail investors. At what point do these folks at public companies wake up?
02:18 Dave
Yeah, I think it’s silly to sort of discount um the influence of retail investors. Uh we know historically, right? There was a a book written about it, a movie called Dumb Money, um because for years, everyone said retail was the dumb money. Well, guess what? In 2025, they proved that really wrong. Um they were some of the first to buy the dip uh in the March, April period. That really helped. When institutions got significantly scared, pulled back, pulled back from stocks, retail stepped in to buy, leading to sort of outsized performance in 2025. Um and I think some companies are now sort of waking up to the component that they should care about their retail shareholder base. Um kind of, you know, a company of course like Robin Hood is at the forefront of that, almost kind of shifting things around to be retail first. Um that’s going to continue to take some time though because the entire industry, investor Relations departments to your point, were really set up for traditional, actively managed mutual fund managers. So, professional investors, not the retail investor, uh but we know that the retail investor is continuing to put money into stocks and they’re probably going to end up, if they have a choice, choosing a company, not just that they know and believe in from a sort of a valuation or earnings growth standpoint, but a company that kind of stands with them is positioned uh for how they think about doing business.