Technology companies, electric vehicle manufacturers and some meme stocks are part of the overall stock mix in Robinhood users’ portfolios, according to a new index for new investors from the brokerage app.
and shares of AMC Entertainment Holdings
preferred equity units
The company said in an announcement Friday morning that Robinhood users are buying and holding companies they “know, understand and believe in over the long term.” Robinhood Investor Index released.
“The index shows how our clients invest based on the 100 most-owned stocks in Robinhood,” the company said in a statement.
“Unlike most other indices, it’s not dollar-weighted, it’s fiduciary. We measure a client’s belief in each investment by looking at the percentage that makes up their portfolio,” Robinhood added.
“‘Unlike most other indices, it is weighted by faith, not dollars. We measure the belief in each investment by looking at the percentage that makes up a client’s portfolio.’“
“And to ensure that all clients are represented equally, we take an average of belief for each investment for all clients, whether it’s $20 million or $20 million in their account,” he added.
“The index does not reflect the position or performance of any individual investor, but rather is an aggregated view of what our clients are relatively investing in,” Robinhood said, noting that it will update the index monthly. (The index does not include exchange-traded funds or cryptocurrency.)
While grappling with institutional and retail investors volatile stock markets and evaluate probability of recessionRobinhood hopes it can be of value for users to see where others are putting their money.
The top 100 stocks for Robinhood users in all of 2021 have outstripped the Nasdaq Composite’s overall performance, and the two are now essentially on par, according to Robinhood’s data.
It has dropped about 23% to date. Dow Jones Industrial Average
fell almost 12% and the S&P 500
15% off during this period.
“As investors grapple with volatile stock markets and assess the possibility of a recession, Robinhood hopes there may be value in allowing users to see where others are putting their money.“
“Verification is really important to some of our investors and so they will find it very valuable,” said Steve Quirk, chief brokerage officer at Robinhood.
In other words: Validation is effectively knowing that a certain group of people take the same approach; For some it helps to feel that they are not alone.
Sure, there may be pitfalls to completely following what others are doing, but Quirk noted that the index is just a data point to inform investors’ decisions.
Other indicators paint a bleak outlook for equity markets. According to the latest data, more than half of the people voted that stock prices will fall in the next six months.emotion survey From the American Individual Investors Association.
However, this can be a ‘buy’ signal because the organization sees the sentiment survey as a ‘counter-indicator’, for example as a value opportunity.
Overall, the most represented sectors in the index include consumer durables, technology and consumer services. said Robinhood.
In early 2021, shares in meme stocks like GameStop surged with social media support from places like Reddit’s WallStreetBets.
But Robinhood came under intense criticism when it temporarily halted purchase orders for GameStop and other companies during the trading frenzy. It was a necessary step. collateral requirementsCEO and co-founder Vlad Tenev later said that the vast majority of Robinhood users buy and hold investors rather than traders looking at short-term games.
Now Robinhood has a new challenge: Tough stock market conditions are straining user portfolios and presenting headwinds for the company itself. Last month Tenev Announced plans to cut staff by 23% Due to weakening economic conditions that constrain business activity and reduce the value of its assets.
Robinhood said in its second-quarter earnings results, assets under custody fell 31% from the first quarter to $64.2 billion in the second quarter.
Shares have lost almost 40% to date.