It took years of focused effort to seduce retail investors back into harm’s way. They were hurt so badly in 2000-02 and 2007-09, it was hard to get them back. But now, finally, after 6 long years of pumping and talking it up, little people have let down their guard once more and levered themselves up to buy stocks with the most borrowed funds in history. Battered and broke, desperate and hopeful; dreams of striking it rich and winning, have won them back to the craps table. Brutally short on cash, they have now literally run margin loans to the max to buy back in. Broker/dealers are scalping the margin interest, gloating over the ‘low hangin’ fruit’ of their ‘distribution channels’, selling their customers’ order flow so that high frequency trading machines can frontrun the little people’s naive dreams of financial freedom. All in a day’s work.
Just when bankers were worried more greater fools could not be found, they pulled them in again. Banker/brokers are back on top, pumping and dumping, and all the while confident that the government will hold them harmless the next time it all blows up as well. As for the little folks…well, thanks for playing. Better luck next time.
Fredric Tomczyk, TD Ameritrade CEO, weighs in on the pulse of retail investing, and which stocks clients are buying. Apple is our most widely held stock, says Tomczyk. Here is a direct video link.