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- One in 5 Americans invested in stocks in the final quarter of 2020, up 5 percentage points.
- Booming markets and a lack of other options have powered interest in stocks.
- Day traders piled in to unloved stocks such as GameStop in January, shaking Wall Street.
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Booming markets and a lack of other places to spend money during the COVID-19 pandemic have sent Americans piling into stocks in recent months, according to new survey data.
One in 5 people in the US – or 20% – invested in stocks, or mutual funds, in the final three months of 2020, up from 15% in the second quarter, a Conference Board survey showed. It also showed fewer people chose to save, or pay off debts.
A surge of interest in amateur investing first became obvious in the spring of 2020, when coronavirus restrictions kept people at home, cancelled televised sports and limited spending opportunities for those who kept their jobs.
Amateur investors gave Wall Street a jolt at the end of January, demonstrating their power by piling into unloved stocks such as GameStop. The huge price rises caused billions of dollars of losses at hedge funds that were betting against the firms.
"The booms and busts of a few unlikely 'meme stocks' have grabbed recent headlines, but the rise of individual investors tells a broader story about spending habits during COVID-19," said Denise Dahlhoff, senior researcher at The Conference Board, a business membership and research group.
Dahlhoff said record-low interest rates - which make borrowing very cheap - and a fall in debt have been key factors.
She said Americans have "more disposable income and fewer ways to spend it. Stocks, which continue to yield strong returns, have become an increasingly attractive option for these consumers."
Trading platforms saw a surge in interest in 2020 which continued in 2021. JMP Securities said trading app Robinhood received 600,000 downloads on just a single day in January during the GameStop saga.
Billionaire investor Sam Zell told CNBC on Tuesday stimulus checks from the government had probably boosted interest in amateur investing.
"What you're doing is you're just creating a whole bunch of surplus capital that's floating around and everybody's trying to figure out what to do with it, and isn't this a fun way to gamble?" Zell said.
The Conference Board said 43% of Americans put their spare money into savings in the fourth quarter of 2020, although that was down from 49% in the second quarter. The survey showed 24% spent their cash on home improvements, up 3 percentage points.