- Google Trends data shows an incredible surge in searches for the “Dow Jones” and “how to buy stocks”
- Unfortunately, retail investors are usually on the wrong side of stock market crashes, suggesting there could be more pain ahead.
- Guggenheim CIO Scott Minerd is warning investors against being complacent and not getting caught up in a potential bull trap.
A dramatic surge in the Dow Jones and S&P 500 has many investors clamoring to buy stocks. Google Trends data suggests retail investors are desperate to avoid missing out on buying the recent dip. Unfortunately, history dictates that retail investors are nearly always on the wrong side of a stock market crash.
Stock Market Crash Sparks Huge Interest From Retail Investors
Whether you blame over-enthusiastic wealth managers on CNBC or the stock market dynamics of fear and greed, significant moves by retail investors nearly always put them on the wrong side of the major-moves in equity prices.
Tracking the S&P 500 for the last 30 years demonstrates that retail investors are almost always positioning in a counter-cyclical manner.
This means that small “mom and pop” investors are usually heavy buyers of the stock market at peaks before crashes and are buying the least during bottoms.
Recent Google Trends data has indicated that during the month of March, searches for “how to buy stocks” are through the roof. As you can probably guess, someone who is making this query is less likely to be a sophisticated investor.
Confirming the surge of general interest that this year’s stock market crash has brought, searches for “Dow Jones” are also extremely elevated relative to their average.
Both these charts do indicate a slight reduction in the number of searchers, but unfortunately the period they cover matches with a sharp relief-rally in…