Goldman Sachs Bank noted that stocks favored by American retail investors have outperformed those favored by professionals from mutual and hedge funds. This happened on fears of missing out further stock growth. It is surprising that retail investors have managed to pick successful stocks without special preparation.

Retail traders prefer to buy shares of the companies that have a difficult financial situation due to the coronavirus pandemic. Professionals, in turn, do not make such a large number of bets because these shares are either unprofitable or low-margin.

The chart below shows how the shares of a small Chinese real estate company Fangdd surged in price by 13 times, but the next day the shares dropped again. This is why professionals do not spend time on small transactions.

The Bank notes that this year the number of small transactions on stock options is rapidly growing. The reason for that is the increased activity of retail investors. They have a fairly large supply of cash that makes it possible to earn money in the market.

Charles Day, Managing Director of UBS Global Wealth Management, assures wealthy clients that they should not worry about losing huge profits. According to him, it is better to leave this type of trading for amateur speculators.

The expert also reminds about the threat of the second wave of COVID-19 and recommends focusing on "growth stocks" as well as on cheap "stocks of value". In addition, he advises holding some cash and government bonds to protect investment portfolio against volatility.