- In an interview with Insider, Robinhood’s head of investment strategy explained how the behavior of retail investors has changed since last year.
- Everyday traders are now taking a longer-term, more informed view of investing compared to the height of the stock boom even in 2021.
- “Now there’s more recognition that you can’t just bet on one or two horses, but you have to have a mix,” she said.
Robinhood has established itself as a household name in 2021 meme-stock rally as retail investors flooded the user-friendly trading app to send names like GameStop And CMA towards the Moon.
But now, with its retirement accounts and high-yield offerings growing in popularity, Robinhood is no longer just a hangout for the Reddit crowd, according to Steph Guild, the platform’s head of investment strategy.
Guild, who worked at JPMorgan for two decades, says Robinhood users are now taking a longer-term and more informed approach to investing than in years past. They continue to favor equities, but their time horizon now reflects that of a more mature and educated investor.
Additionally, she says the company’s educational tools and articles – including his own weekly column – have seen more traffic, and retirement accounts continue to see growing numbers of signups.
“Our clientele understands better now that investing is more of a long-term game, rather than something fun,” Guild told Insider in an interview this week. “Whereas a year ago customers would open accounts and just buy a few stocks they thought were cool, now it’s more recognized that you can’t just bet on one or two horses, but you have to have a mix .”
The 2022 stock sell-off saw most Robinhood investors buy the drop in growth names like You’re hereGuild explained, who underscored retail investors’ focus on long-term investments, rather than quick turnaround times.
Even as uncertainty persists around the Federal Reserve’s rate hike path — and how that will play out in a credit crunch and eventual recession — Guild notes that the biggest robinhood user farms did not see a significant change, suggesting that they are making informed decisions, rather than changing their behavior based on headlines.
According to April 3 data, top performing names like Apple, You’re here, AmazonAnd Nvidia were among Robinhood’s 10 most popular stocks – a list that closely matches the The main winners of the S&P 500 of the first quarter.
Moreover, more and more users are opting for the platform’s $5 per month premium feature, Robinhood Gold, which currently offers 4.4% APY on uninvested cash stored on the app. The attractive yield the platform is able to offer is a direct extension of the interest rate hikes the Fed has enacted over the past year. The influx of clients into gold is another sign that casual investors are taking a longer-term approach with their money.
But despite the increased discipline Robinhood is seeing among users, stock favorites from memes like GameStop and AMC remain some of the platform’s most popular stocks. Guild points out, however, that the behavior around names has changed and fewer users are trying to flip them for quick wins.
Going forward, she does not expect any impending economic headwinds to influence behavior given that clients weathered last year’s brutal equity market winter.
“It was actually a worse environment for what they were holding,” Guild said. “And they’ve barely sold anything. I feel like they’ve weathered a storm due to the things they already hold.”