Google searches rocket as first-time investors ignore risks and buy the dip in a big way
The financial markets have been flooded by “bored sports bettors” who turned to Wall Street and Bay Street for their kicks when on-field action was halted by the coronavirus.
The number of first-time investors grew in March when the stock market crashed, with traders still sticking around. The question remains whether they will stay interested once sport in North America gets under way.
A new study by Investing.com, working with the online visibility management platform SEMrush, revealed that Google searches in the U.S. for the term “how to invest in the stock market” rose approximately 83% from February to April of 2020, following the onset of the pandemic, as well as 328% year over year since 2019. Additionally, searches for the term “stocks to buy” skyrocketed 124% from February to April, and 417%.
Jesse Cohen, senior analyst at Investing.com, said both terms are commonly associated with first-time investing. In a separate analysis of its own platform, the site found that its number of U.S.-based users jumped from 13.1 million in January and February 2020 to 21.5 million in March and April - an increase of more than 64%. Only a small increase of 12% was seen in May and June - 24 million - signalling that not only was this increase in new investors confined to the stock market crash back in March, but that these new investors are sticking around.
“Essentially bored sports bettors shifted their focus to day-trading when the coronavirus pandemic brought sporting events to a halt earlier this year,” said Cohen said. “Barstool Sports founder Dave Portnoy has become the poster child of this day-trading craze that has taken Wall Street by storm. The big question is how many of these first-time day-traders will stay in the market once sports are back on.”
From December 2019 to May 2020, the group of companies that saw the largest percentage increases in page views included multiple airlines, cruise lines, and oil companies. In these instances, investors are likely perceiving buying opportunities for plummeting stocks in hard-hit industries. Also, rising interest in the Zoom videoconference platform and pharmaceutical companies reflected how investors are betting on the companies that are providing solutions to the pandemic’s challenges.
Cohen said: “While market participants are still struggling to understand the true extent of the damage from the fast-spreading virus outbreak, many first-time traders chose to ignore the risk and buy the dip in some of the hardest-hit names in the market. In retrospect, that wasn’t such a bad move.”