Why Retail Stonks are the Talk of the Town

Retail stonks have been dominating the news, but not in the way that you think

Published on Feb 02, 2021

blog writer
TopStonks Team

  • Retail traders are the talk of Wall Street

  • "Retail trader" doesn't refer to traders focused on the stocks of goods retailers

  • Many novice investors are confused by this

Retail traders are not traders focused on the retail sector. They are individual traders who buy or sell for personal accounts. Institutional traders, on the other hand, buy and sell securities on behalf of clients as a fiduciary. Typically, a fiduciary prudently takes care of money or other assets on behalf of another person. Institutional investors include pension funds, mutual funds, endowments, insurance companies, and exchange traded funds (ETFs).

In the current news cycle, retail traders are being used to refer to the traders who congregate on the Wallstreetbets Subreddit. While those traders execute their trades at all brokerages, they've traditionally been most closely associated with Robinhood.

However Robinhood has become the subject of their ire. Sentiment against Robinhood among the r/wallstreetbets community has been building for some time. In Spring of 2020 we wrote about Robinhood's unreliability undermining their brand prestige. If anti-Robinhood sentiment was steadily growing in 2020, it hit a crescendo last week when they essentially turned off trading in the most popular stonks. The Wallstreetbets community believe Robinhood unfairly targeted their trades for the benefit of themselves and distressed institutional investors, or some combination of both. Robinhood has big IPO plans so watch to see if their customer base walks out the door when they need them most. Wanna hear about wallstreetbets stonk trades before CNN whines about them?

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