Retail replaces ‘smart money’ as Wall Street rocket fuel

RETAIL investors are often late to Wall Street parties, only catching the rally once it’s established and “smart money” is looking for the exit. But that doesn’t appear to be the case this time around.

Flow and survey data show that – far from playing catch-up – retail investors are a key force behind the latest US equity whoosh that has been lifting the S&P 500 and Nasdaq to new highs on a near-daily basis.

Retail investor participation as a share of total S&P 500 flow last week reached 12.63 per cent, according to calculations by Goldman Sachs analysts. That’s the highest share since February and well above the recent average, as retail participation has rarely exceeded 13 per cent in the last few years, their figures show.