Roger Scott is one of the most successful traders in the world and is the current head trader at WealthPress. WealthPress is dedicated to increasing the financial literacy of everyday people and opening the doors to financial and trading success for everyone, whether they’re rich and famous or ordinary working people.
Lately, retail trading has been seeing activity like never before in history, and I asked Roger Scott to shed some light on what this might mean for the future. He agreed to take some time off of WealthPress to answer my questions and give us some insight.
Roger Scott points out that recent retail trading trends have made the regular market a lot more volatile, especially for popular stock picks. Many new retail investors have entered the market and have not yet learned many stock fundamentals and best practices.
This means they will buy and sell a lot different than seasoned veterans might, which means prices will fluctuate a lot more than we are used to. This means it may be a great time to make money if your foundations are solid and if you have the stomach for seeing red.
Share Prices Move through Unorthadox Means
As mentioned, the new retail investors are buying and selling for not exclusively fact and number-based reasons. Even experienced investors are trading for these same reasons.
While it is always a good idea to trade based on due diligence and fundamentals, Roger Scott says that if you can change your thinking to that of a current retail investor, you can see what affects the current market.
Some Sectors are More Vulnerable than Others
Sectors that are very popular with the general public are going to be affected a lot more than others—such sectors as technology, cannabis, and gaming.
These sectors are very popular with the young people who are part of this current wave of retail investing. So, we can almost predict what stocks and which sectors will be affected by the current trend of retail investing by thinking about which industries and which stocks will speak to young people the most.
We should also think about how the companies are perceived. If the retail investors generally dislike them, those stocks might move differently from what we’re used to in the current climate.
Younger Investors are more Common
As we’ve mentioned a few times now, Roger Scott believes that most of the new wave of retail investors is on the younger side. There’s always an exception to the rule, but if you spend a few hours on their favorite forums and websites like Reddit, you’ll see that they skew towards a younger audience that enjoys videogames, crypto, and the like.
This is why stocks like GME and TESLA are so affected by how this audience perceives them.
Reputation is More Important than Ever
As Roger Scott has emphasized, reputation and perception are more important than ever and may even outweigh the actual facts and numbers in the current climate. Many retail investors, especially in this current wave, are investing based on their emotions.
If they like a company, they will go above and beyond to support them through stock purchases, while if the opposite is true, they will not touch it no matter how well it may perform.