Some investors saw their 2021 gains evaporate in a volatile start to 2022. Here’s what they’re saying now.
The stock market hit stratospheric highs in the first two years of the pandemic. And perhaps most notably, a contingent of individual investors have been lucky enough to ride this wave to the benefit of their personal portfolios.
The deep and rapid recession that set in when lockdown measures took effect in March 2020 ended what had been a protracted recovery in employment, according to the US Bureau of Labor Statistics. The year ended with 10 million fewer jobs as many American workers were laid off or laid off, reeling from a world instantly changed by an invisible and deadly virus.
Headlines from these early days of the pandemic captured a collective sense of loss and helplessness among some low- and middle-income workers, unsure of how or why, but seeking answers and some solace. For some, despair will not last. Some people have chosen to go public, in part encouraged by economic stimulus payments and access to app-based investment platforms, according to a Deutsche Bank survey published in February 2021.
Many have joined stock trading apps like Robinhood in droves. Data from a July 2021 filing with the Securities and Exchange Commission showed the company had 12.5 million funded accounts in 2020, up from 5.1 million in 2019. Online communities have formed around the goal of developing personal investment strategies or, in the case of the infamous WallStreetBets forum on Reddit, finding ways to outsmart hedge funds and crack down on short sellers who had bet against companies.
Diego Flores, 20, said he started investing two years ago. He noticed the buzz about individual investors looking to go on a stock-buying spree on Reddit and took action.
“I decided to put some money in GameStop and AMC just to see what happened. Surely enough, it really started to go up,” Flores said, adding that he made $800 on an investment. of $4,000 in GameStop.
Dhananjay Narayanan, 20, also saw the upside potential on WallStreetBets, but said he stopped short of investing.
“GameStop stock just kept going up and up. And they were talking about AMC, so when I tried to invest in some AMC call options, Robinhood actually canceled my call option,” Narayanan said. “And that pissed me off a lot. And I guess it upset a lot of people in the community.
“You advertise yourself as this company that you know wants to give everyone a fair opportunity to invest. And then, as a company, you prevent certain exchanges from happening, because you may have outside interests said Narayanan.
Robinhood had restricted some shopping activity around GameStop and AMC due to market volatility in January 2021. Robinhood CEO Vladimir Tenev apologized to Congress during a hearing on the matter. last year.
Stock markets recorded huge gains through the end of 2020 after falling to deep lows in March of the same year. The rally continued through 2021, during which the S&P 500 saw a record 70 closes. In total, at the end of last year, the S&P had posted a gain of nearly 27%. The Dow Jones Industrial Average rose almost 19%.
The start of the new year brought a rapid market correction that wiped out much of these gains. January was the worst on record for stocks since March 2020.
Flores says his assets are in trouble.
“They’re not doing particularly well. Especially since I’ve decided to take more risk lately, and just like looking to grow stocks, penny stocks. And so it didn’t end particularly well,” Flores said.
Others, like Narayanan, believe the market correction has been “a relatively shaky few weeks.”
“It will most likely continue to fall, but I had planned to hold these things for the long term, so it’s just turbulence in my portfolio,” Narayanan said.
Some new traders, like self-proclaimed “baby investor” Cara Cahn, 23, who started investing about three years ago, say she thinks the market will recover.
“When the market dips, people panic and keep selling, which keeps it going deeper and deeper,” Cahn said. “If you really believe in something, hold on, as the crypto community says, hold on for life.”
Markets have been looking for a stable footing lately, but the landscape remains uncertain, with the Federal Reserve expected to raise benchmark interest rates in mid-March. Fed Chairman Jerome Powell said last week that the central bank would also end its large-scale bond purchases around the same time to help rein in inflation.
“I’m actually more excited about market declines more than anything because it presents me with an opportunity to buy and hold,” said 21-year-old Mihir Wadekar.
Wadekar said he started investing in 2020 and is now freelancing in his own cryptocurrency startup. He said he was ready to tolerate market declines knowing he can keep buying and wait for the eventual upside.
Others, like Flores, are not so optimistic.
“I’m thinking of selling out completely, just to let this pass,” Flores said. “Mostly because, again, I’m not very up to date with how it works. And just kind of seeing how it plays out and learning a bit from it, rather than learning and losing all the money I made.