Retail investors are now making up more than 25% of the stock market but 80% of them are losing

Since the start of 2020, the stock market saw a large boom in the number of retail investors placing their bets – specifically, increasing from just 10% last year to over 25% year-to-date.

When we looked at individual cases we found casual investors who weren’t taking a strategy approach ended up in situations where their returns turn quickly turned negative – depending only on their own limited knowledge of stock evaluation techniques and reading forums such as /r/wsb.

We interviewed Jackson, a participant in our survey, who found himself as part of that 80% after loading money into his account and trying to figure things out as he went. He saw his portfolio end up at -20.36% within 3 weeks.

Since March, we started tracking a randomly selected group of users on Front, other trading platforms (such as Robinhood and eTrade), and those who only had passive investing strategies (such as WealthFront).

Stock portfolio performance over 6 months

	3-20	4-20	5-20	6/20	7-20	8-20	9-20	Profit
S&P 500	2,435	2,845	2,953	3,094	3,224	3,374	3,285
S&P 500	$10,000	$11,684	$12,127	$12,706	$13,240	$13,856	$13,491	$3,491
Monthly Profit	–	16.84%	3.80%	4.77%	4.20%	4.65%	-2.64%	34.91%
Front	$3,512.76	$4,192.13	$4,453.30	$4,753.45	$5,115.19	$5,525.94	$5,458.52	$1,945.76
Monthly Profit	–	19.34%	6.23%	6.74%	7.61%	8.03%	-1.22%	55.39%
Other trading	$4,872.98	$5,472.84	$6,032.72	$6,226.97	$6,538.94	$7,054.21	$6,472.24	$1,599.26
Monthly Profit	–	12.31%	10.23%	3.22%	5.01%	7.88%	-8.25%	32.82%
Passive	$15,827.44	$16,704.28	$17,018.32	$17,179.99	$17,398.18	$17,716.57	$17,815.78	$1,988.34
Monthly Profit	–	5.54%	1.88%	0.95%	1.27%	1.83%	0.56%	12.56%

^{Survey Description: The active investor (Front) average account holdings were $3,512.76 and had 36 participants and the active investors (other trading platforms) had average account holdings of $4,872.98 and had 42 participants. The passive investor’s group had $15,827.44 average account holdings and had 29 participants over a period of 6 months from January 1st, 2020 to June 15th, 2020. All participants were located in the US trading in US currency.}

The results were quite definitive for the different groups but what stood out the most are users who invested through Front’s platform. Front gave users passage to finish at 55.39% total profit (or 20.48% higher than the S&P 500) while other trading platforms finished at 32.82% (or -2.09% lower than S&P 500).