Hedge Funds Plowed Into the 2023 Market Rally While Retail Investors Missed Out – The Average Joe

    Hedge Funds Plowed Into the 2023 Market Rally While Retail Investors Missed Out

    Victor Lei — Head of Research

    January 4, 2024

    January 4, 2024

    When retail investors are zigging, hedge funds are zagging. According to Bank of America client flow data, retail investors dashed out of stocks in 2023 while hedge funds capitalized on a massive rally.

    • US hedge funds were the large net buyers — plowing $66B into US stocks last year.
    • Stock buybacks from US corporations also accelerated compared to the year prior.

    But in 2022, more Americans were invested in stocks than ever, with ~58% of US households invested in some form — up from 53% in 2019. At various points in 2023, retail investors made up as much as 23% of stock trading volume and 48% of option trading volume.

    Seeking out better info for retail investors

    What if world-class research and analysis become accessible to all investors, not just institutional asset managers? Could that level the playing field?

    For that, we’ll turn to these Wall Street veterans, who changed sides to help the little guy invest better. They’re putting it into practice with different series that take investors through various aspects of the investing process.

    Here are the steps to elevate your investment game in 2024.

    Step 1: Grasp the underlying market drivers. Bruce Liegel is a former macro fund manager at Millennium and Lockheed Martin Investment Management Co.

    • He launched the Global Macro Playbook, which focuses on global macroeconomics and its implications for investors.
    • These factors drive returns across all asset classes, including stocks, bonds, currency and commodities.

    After developing a strong understanding of what drives markets, it’s time to build your dream portfolio.

    Step 2: Construct the optimal portfolio. For many retail investors, that means using ETFs to ride the market. Marco Santanche, a former quant strategist at Credit Suisse, is teaching investors the different ways to create an ETF portfolio inside his Quant Evolution series.

    • He also provides weekly commentary to guide readers through the ups and downs of the market.
    • The series is particularly helpful in breaking down advanced investment principles and techniques in plain English.

    Step 3: Choose your own flavor. While ETFs are good to start, some investors prefer to go deeper into an asset class or expand their horizons. These two series can help with that.

    • EM Dynamics: Yury Zusman, a London-based emerging market strategist for hedge funds, teaches investors how to diversify into emerging markets like Mexico, Egypt and Hungary.
    • Agricultural Commodities Focus: Doug Christie, an ex-Cargill agribusiness executive and commodity trader, helps readers navigate the ag commodity markets from fundamental, technical, and macroeconomic viewpoints.

    Deep-dive into some of our favorite coverage from these experts:

    1/ Trend-Following ETFs – The Strategy That Aims to Benefit From Directional Biases

    2/ The Resurgence of Japan – With Equities Surging, Japan’s Economy Is a Bright Spot in Asia

    3/ Trading Signals – How Trading Signals Might Enhance an Investment Strategy

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