Deutsche Bank survey: The new love for shares: Why the Corona crisis is driving more and more people to the stock exchange | news
Shares in this article
• Many Americans use stimulus checks to buy stocks
• Young US retail investors are euphoric about leverage products
• Trading apps are in tune with the times
What do you do with all the money? This luxury problem is likely to have preoccupied millions of people in the past year. Because the opportunities to spend money were extremely limited due to the ongoing Corona measures worldwide. Canceled vacations, closed restaurants and fashion stores have therefore literally forced many citizens to save.
Corona checks fuel the share boom in the USA
This “problem” naturally also burdened many Americans in the past year, who on top of that were encouraged to spend money by the government with free economic checks. Although this corona aid was essential and necessary for survival for many US citizens, a large part of the younger population did not need these so-called stimulus checks under any circumstances.
An online survey by Deutsche Bank, which was carried out among 430 investors, showed that half of the respondents between the ages of 25 and 34 firmly expect to invest at least 50 percent of their Corona aid directly in shares. The 18- to 24-year-olds who took part in the survey even stated, on average, that at least 40 percent of their stimulus checks were used to buy stocks.
The 35- to 54-year-olds and those over 55-year-olds, on the other hand, calculated that an average of 37 and 16 percent of their checks were spent on equity investments. In addition, the data specialist at Deutsche Bank, Parag Thatte, came to the conclusion that the future stock market exposure of US check recipients could increase even further.
“In the future, however, survey respondents plan to invest a large portion (37 percent) of all upcoming stimulus checks directly in stocks, which could represent a significant inflow,” said the bank’s earnings report.
In this context, however, it should be noted that the Deutsche Bank online survey was aimed exclusively at investors or at people who already had a share portfolio. Accordingly, the results of the survey only allow limited conclusions to be drawn about the total population of the USA. Nonetheless, with the help of this online survey, Deutsche Bank comes to the conclusion that “a large part of the upcoming US stimulus checks will probably be kept on file”.
An “aggressive cohort” drives the courses
The survey also showed that almost half of those surveyed, around 45 percent, were active on the stock exchange for the first time last year. As a result, the experts at Deutsche Bank assume that the latest rally on the US stock market was primarily triggered by inexperienced private investors.
“Behind the recent surge in retail investment is a younger, [
] aggressive cohort not afraid to leverage, “said Jim Reid, equity strategist at Deutsche Bank, in a report that followed the results of the online survey.” Given the stimulus checks currently in Biden’s plan [
] in the amount of approx. 405 billion US dollars are planned, there is a maximum of around 150 billion US dollars, which according to our survey could flow into US stocks “, the expert continues.
Germans develop a new love for shares
The fact that private investors can currently develop a new love for shares even without lavish stimulus checks can be demonstrated in this context by the development of the German shareholder quota. The number of shareholders in Germany rose by around 2.7 million in 2020 compared to the previous year. Accordingly, around 12.4 million German citizens are currently directly or indirectly active on the stock exchange.
Accordingly, almost every sixth German is now invested in stocks, equity funds or ETFs. The number of shareholders last year thus reached the highest level in more than 20 years. Many German citizens have apparently recognized that the zero and negative interest rates paired with a rising inflation rate have devastating consequences for their own assets, provided that these are mainly invested in savings books, overnight and fixed-term accounts.
Regardless of this, there were of course a few other reasons in the past year that the shareholder quota in Germany returned to the level at the turn of the millennium. In addition to greatly reduced opportunities to spend money, the Corona measures last year also ensured that many German citizens simply had more time and patience to deal with their own finances.
New trading apps are in tune with the times
The Corona crisis also ensured that the deployment and use of many digital applications suddenly became normal. In the area of financial services in particular, many new trading apps and neo-brokers have established themselves alongside the conventional house and direct banks, some of which even enable their users to trade shares for free. As a result, these inexpensive broker apps were not only able to make trading in stocks cheaper, but also, above all, to simplify them and thus hit the nerve of an entire generation.
Among other things, it is thanks to such trading apps that the number of shareholders between the ages of 14 and 29 increased by a total of 67 percent between 2019 and 2020. With a rate of increase of 34 percent compared to the previous year, the number of shareholders in the 30 to 39 age group also rose sharply. While these two age groups only had a total of around 2.2 million shareholders in 2019, it was already more than 3.1 million in 2020. As a result, almost a million young German citizens were able to bring themselves to being active on the stock exchange for the first time last year.
Young adults storm the parquet
Although young adults currently still play a very small role on the stock exchange, there has been no greater rate of growth in shareholders from this age group since 1997 than in 2020.
In addition to a lot of boredom in lockdown, cheap broker apps and possibly too few alternatives for the monthly pocket money, various social media platforms have most likely also contributed to the current hype around stocks. Search queries for the word “share” on YouTube, Google and Reddit shot through the roof, especially in spring 2020.
In this context, one can only hope that the numerous new shareholders will remain loyal to the stock exchange in the long term. Because the history of the stock market has painfully shown that inexperienced stockbrokers in particular often throw the gun in the towel very quickly. As a consequence, the number of shareholders in Germany fell from 12.9 million in 2001 to just 8.4 million in 2010 after the dot-com bubble.
Newcomers in particular must be aware that buying shares is not a gimmick on a smartphone, but rather a stake in a real company. Young stockbrokers who always stick to a simple wisdom from Warren Buffett in this context should not have too negative experiences in the capital markets in the long term.
The old master from Omaha once advised inexperienced investors: “If you are not ready to own a share for ten years, don’t even think about owning it for ten minutes”.
Pierre Bonnet / editors Forex-news.com.net
More news about Deutsche Bank AG
Image sources: solarseven / Shutterstock.com, Bro Crock / Shutterstock