The Cult of the Retail Trader Has Fizzled
The GameStop and AMC manias are long gone, with individual investor returns falling 40% this year and digital currency prices tumbling.
Illustration: Nick Little for Bloomberg Businessweek
He could stomach the plunge in global equity markets that devalued his stock investments. He was still willing to stick it out when the money he’d moved into crypto coins with names such as SushiSwap and Avalanche halved in value. But the collapse of FTX Group, where all his remaining savings sit in a locked trading account, was too much for Joseph Pizzoferrato. “Losing $10,000 is crushing me,” says Pizzoferrato, who works for a life insurance company in Nevada and began day trading in 2020 while stuck at home during lockdown. “If I do ever go back into crypto, it’s going to be just extra money but not anything involving life savings.”
Pizzoferrato, 33, is fairly typical of the cohort of retail traders who roiled the markets when they took up investing en masse in the Covid-19 pandemic’s first two years. The freeze on student loan payments and an historic bull market were on their side. Now, the so-called dumb-money crowd that was beginning to look like a permanent fixture of the financial world seems to have disappeared as quickly as it arrived.