Hey y’all,
There are two charts you need to see today, and I think they’re the most important charts in finance right now.
Take a look at this one first:
This shows retail investing between market open and 12:30 pm over the years, and the spike on the far right side is Monday morning, when individuals bought a net $4.1 billion in U.S. stocks, the biggest such buy on record.
In plainspeak: retail investors are more “bullish” and more “greedy” than they’ve ever been right now.
But…
Then there’s the second chart…
Institutional investors — you know, the supposed “insiders” on Wall Street and in the banks — are bearish at the highest levels since 2023, and pretty close to the levels they were bearish at back in 2008.
Now, there are two ways to read this…
One is the obvious narrative: the institutions are right, the retail traders are jumping the gun, and a big crash is coming sooner than later.
In the interest of full disclosure, I think this is probably the 80% likely outcome (although I’m not necessarily betting on a huge, extended downturn).
And I believe that the “decision point” could come as soon as next Thursday, when we get the official GDP print.
After all, the last time we got a negative GDP print, it kicked off the bear market of 2022. And the preliminary results suggest that the GDP result this quarter WILL be negative.
That possible outcome is why I’m working on putting together a Roundtable for next Wednesday, a week from today, with as many of our top experts as we can get — just to help you prepare for what’s to come.
With that said, there is another possible outcome.
In recent years, we’ve seen a trend of “everyday folks” knowing more than the so-called experts.
I’m not going to get into too many specifics, because some of the examples are fraught with political implications — but to be clear, we’ve seen it on both sides of the political aisle, and we’ve seen it completely removed from the political arena, too.
There’s a worldwide populist movement right now that insists on “vox populi, vox dei” rules — the voice of the people is the voice of god.
Maybe that isn’t true in the markets. Maybe the institutions will always win.
But, to be fair, the markets HAVE been moving higher over the last several weeks, and this retail/institutional divide isn’t a brand new thing. The everyday traders HAVE been pushing the markets even against Wall Street’s bearish momentum.
Either way, I think we’ll know a lot more by next Thursday. So I believe Wednesday’s roundtable is critical for every trader to attend.
I’ll drop more information as soon as I can.
To your prosperity,
Stephen Ground
Editor-in-Chief, ProsperityPub
