Retail investors may be sending a bullish signal
Investors may be feeling bullish heading into year's end, with searches for "Santa Claus rally" on the rise on Investopedia. Investopedia Editor-In-Chief Caleb SIlver says investors have not only been searching for information about the seasonal stock market pattern, but also the highs for the Dow Jones Industrial Average (^DJI). "People have been waiting to buy stocks all year," Silver tells Yahoo Finance Live's Diane King Hall and Seana Smith. Watch the video above to find out what else people are searching for on Investopedia.
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Video Transcript
DIANE KING HALL: Some of your top searches on Investopedia, the Santa Claus rally is one. Do you think investments as gifts would be gratefully received this holiday season?
CALEB SILVER: Of course, who doesn't want to get an investment as a gift. But I think what that is an anticipation of one of the strongest times of the year the Santa Claus rally. Actually, right now, guys, we're in one of the best two week stretches for the market. All year, the sort of end of November, early December, two-week run here.
But the Santa Claus rally seasonally pretty predictable. Not last year. But it's seasonally pretty predictable. People are anticipating that. Just the fact that people are searching for that shows you that the appetite is still strong. People have been waiting to buy stocks all year.
We track our newsletter readers. Every two months, we survey them, and they have been cautious all year preferring to put their money in CDs, preferring money market accounts. Now they want stocks. They want to know what the all time high is for the Dow. They think we're nearing that. We're not that close for the Dow. We are for the S&P 500.
Also the wash sale rule. Anybody that's had losers this year is thinking about selling them. You got to know you can't sell them and rebuy them within that period of time, otherwise, that is against the law. But then you also see some people suffering with their personal finances looking for the best cash advance apps and then when to cash in those I-bonds.
So you've got this fear on the one hand of their personal financial situation. But the promiscuity when it comes to the stock market and putting money to work.
SEANA SMITH: Caleb, how much when it comes to the stock market and putting money to work right now? This optimism maybe that we're sensing from some of these retail investors. How much of that is driven by this FOMO rally that we've been talking about? Fear of missing out. They've seen the gains in a handful of these stocks since the start of the year. They're doing everything they can to maybe make a few bucks before year end.
CALEB SILVER: Yeah, it's pretty predictable. And I feel that way too, right? I've been cautious as well. I've been regular on my 401(k). A lot of people have. And we were talking to BlackRock the other day, people have been regular about the 401(k) contributions, those that have that nudge.
Other people, retail investors that invest on the side or do their own self-directed investing, they haven't been putting money to work at all. So I think there's a fear that they've missed a rally and they have. And that things may continue to get better as rates come down a little bit and as we may have hit that terminal point for the Federal Reserve and its interest rate hikes.