A version of this story first appeared in CNN Business’ Before the Bell newsletter. Don’t have a customer? you can sign up right here, You can listen to the audio version of the newsletter by clicking on the same link.
Reddit investors have been the butt of many jokes over the years, but could these much-hyped meme merchants have the last laugh?
A surprising new survey reveals that 58% of institutional investors — professionals who trade on behalf of banks and pension funds, the so-called “smart money” — admit to making investment decisions based on information from Reddit.
Of those familiar with the popular, gossipy social media site, 46% expect to use the platform more in the next year and nearly 50% consider Reddit to be of “high importance” in stock valuation, reports Brunswick Group. Institutional investors also cited Twitter and TikTok as helpful platforms for research investments.
This revolutionary change in information-gathering comes as a pandemic-era influx of retail investors, day traders and outright novices revolutionizes the way Wall Street functions.
What are you saying: According to data from Wanda Research, retail investors are pouring a record $1.5 billion into the stock market every day. Corporations are paying attention, and so are institutional investors. As Main Street traders continue to have an increasing influence on the markets, it is becoming increasingly important for professional investors to be aware of what they are doing.
“Institutional investors are making inroads into traditionally retail-oriented online spaces,” the Brunswick analysts wrote. “This increased interest among retail investors may be the result of financial fallout from popular ‘meme stocks’ like GameStop, AMC, and Bed Bath & Beyond as institutional investors look for ways to keep their pulse on the conversation among retail investors. ”
The overlap between institutional and retail investors isn’t limited to Reddit and social media. Robinhood Snacks was ranked as the most subscribed newsletter by the institutional investors interviewed.
Brunswick has conducted its annual survey on the digital habits of institutional investors for more than a decade. This year, it picked up 257 institutional investors across North America, the United Kingdom and the European Union.
Retail investors pool money and power: According to a recent report by Bain & Company, retail investors now hold half of the total assets globally. That surge in power has led companies to structure investment products that appeal to these individuals, accelerating the convergence between the retail and institutional worlds.
At the same time, retail investors have become more discerning and are doing their own research. According to research conducted by investment platform Public, around 63% of retail investors spent more time researching stocks in February as compared to the same month last year.
Meanwhile, institutional investors are embracing the world of memes. The hedge funds revealed in a recent filing that they increased their holdings of GameStop by nearly 15% last quarter.
▸ Two important jobs reports were released on Wednesday and the results were, annoyingly, contradictory.
The Bureau of Labor Statistics reported on Wednesday as part of its monthly Job Openings and Labor Turnover Survey, or JOLTS, that the number of job openings in the United States fell to 10.8 million, down from a revised 11.23 million in December.
At the same time. According to ADP, private businesses added more jobs in February than forecast. The payroll company estimated 242,000 jobs were added last month, exceeding forecasts of 200,000 and more than doubling the revised 119,000 added in January.
Investors and the Federal Reserve will look for more clarity on the state of the labor market in Friday morning’s official jobs numbers.
Fed officials have expressed concern that a tight labor market could exert upward pressure on wages and in turn inflation.
▸ The gap between home seekers and actual homes widened significantly last year. New data shows there are now 6.5 million homes short in the US housing market.
The overall housing rate slowed in 2022, while completions climbed. In 2022, nearly 1 million single-family homes were started, a 10.6% decrease from 2021, though still more than in any other single-family year until 2012.
Want to dig deeper? Watch Before the Bell interview with David O’Reilly, CEO of real estate developer Howard Hughes Corp.
▸ My colleague Brian Fung reports: US senators said Wednesday that there is growing bipartisan support for revising a federal law known as Section 230 of the Communications Decency Act that grants mandatory immunity to tech platforms and websites. is what they publish.
“Here’s a message for Big Tech: Reform is coming,” said Sen. Richard Blumenthal, who chaired a technology subcommittee hearing to consider changes to the law.
Lawmakers from both parties praised the Supreme Court for considering Section 230 during the hearing of Gonzalez v. Google, a case about whether to sue YouTube for algorithmically suggesting terrorist-produced videos to users can be run.
This can have a big impact on how social media sites rank, present and promote online content.
But the senators said that, although the court rules, it is up to Congress to rewrite the law so that members of the public can take a stage in the court and hold them accountable.
Federal Reserve Chairman Jerome Powell wrapped up his second and final day of congressional testimony on Wednesday with a relatively uneventful three-hour hearing before the House Financial Services Committee.
But there was one notable moment: Representative William Timmons asked a question about the trillion-dollar coin. it’s far fetched Solution to the debt ceiling crisis where the President issues $1 trillion of platinum coinage, deposits it with the Federal Reserve, and allows the government to continue paying its bills.
When Powell was asked if he would accept the coin, he said, “There are no rabbits out of a hat here.” “That would be a rabbit coming out of a hat.”
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