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No, Robinhood Traders Aren’t Affecting the Stock Market
The millions of new Robinhood stock traders aren’t moving the markets as much as people think
There is a force that is moving the stock market. No, it’s not the Fed. It’s not the hedge funds. It’s an army of day traders numbering in the hundreds of thousands. At least, that is what some of the headlines would have you believe.
They are calling it the Robinhood effect and for good reason. In early May, Robinhood reported 3 million new account openings in the first four months of the year, half of which were for first-time investors. And it’s these new investors that are supposedly having an outsize impact on the stock market.
But is that true? Before we can answer that, we need to go back to where this all started.
Where did the Robinhood effect come from?
Though March 11, 2020 may not be a particularly memorable day for the stock market, it set in motion a set of events that would ultimately create…
