Armed with AI and Social Media, Retail Investors Are Confounding Some Institutional Investors

Retail investors today have access to tools they never did before, supporting them in their investment decisions and giving them new influence over the markets - a level of influence they’ve never had before. As a result of this influence, the S&P 500 continues to soar to record highs on the back of momentum driven by retail investors.

Bank of America reported in its September Global Fund Manager Survey that retail investors’ stock allocation is at 67.3%, based on the most recent AAII Asset Allocation Survey. Additionally, Barclays strategists said in a note earlier this year that retail investors have primarily been driving this year’s rally, dumping over $50 billion into global stocks in July alone. According to Barclays, retail investors remained increasingly enthusiastic about equities, although institutional participation has been “muted.”

It's easy to see why retail investors are so excited about equities - now that they have tools available to them that they didn’t have before.

AI tools grant retail investors new influence

In an email interview with Hedge Fund Alpha, Nic Lin, CEO of Aether Holdings, said the influence of retail investors has been amplified significantly due to changes in market accessibility, communication channels and available asset classes. He added that younger generations are increasingly allocating capital to alternative assets like cryptocurrencies and private equity and adopting new technologies to support their efforts.

Also see: Engineer-Turned-Hedge-Fund-Manager on Keeping It Simple

“There’s… been a growing acceptance towards utilizing AI-driven tools for investment guidance, democratizing access to sophisticated financial resources,” Lin explained. “… Before AI, sophisticated investing tools were only available behind closed doors, meant for Wall Street Insiders. AI has changed that and allowed Main Street investors to gain the same kind of access as the bigger players.”

Aether is a publicly traded company which describes itself as  providing "artificial Intelligence with human analytical acumen to empower traders with cutting-edge tools, dynamic analytics, proprietary research, and actionable insights that enable smarter, more confident decision-making."