Trader’s Narrative

Over the weekend, Barron’s coverstory was “Where’s the little guy?”. Basically it pointed out that while the market has gone (almost continuously) higher, there has been a lack of participation from the “little guy” or retail investor.

This is something that I wrote about at the beginning of May, when I asked, Where are the retail investors?

In that note, I looked at the internet traffic directed to the major electronic retail stock brokers. My logic being that the level of activity from retail traders would show up as they logged on to their accounts online. I call this my “sheeple index”.

Unfortunately the best data source for internet traffic is Alexa. It is a flawed measure for various reasons but still, I do believe that it does show more or less the level of interest that regular people have in the stock market. Especially when such apathy is confirmed through various sentiment measures.

Here’s an up-to-date version of the graph I showed before. The graph is a bit “herky-jerky” but more or less it shows the same trend continuing. We are not seeing any excitement for the stock market from the regular folks out there.

Which in a strange way is just fine. But only for a while. Eventually the bull market will need an infusion of capital to sustain itself. And the sheer size of it demands that it can only really come from one source, the retail investor.

If the market continues to go higher, its siren call will in the end lure in even the least enthusiastic. I agree with Barron’s that it would help galvanize the attention of the public for a very successful and widely known company to go public. The technology boom of the late 1990’s had Netscape, the quiet bull market of the mid 2000’s had Google (GOOG). We need another one of those.