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The stock market is a fascinating place right now

Myles Udland
·Markets Reporter
·3 min read
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Friday, February 12, 2021

A version of this article first appeared in the Morning Brief. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe

A new abnormal in financial markets.

All week in this space we’ve explored some of the oddities in today’s financial markets.

Valuations are quaint.

Great earnings aren’t being rewarded by investors.

Companies doing poorly are seeing their shares do better than companies doing well.

In these kinds of environments it can be tempting to try and pull together One Big Story that explains why everything that is happening in markets is indeed happening.

But this effort often leads to misguided and sweeping statements that end in blaming the Federal Reserve for manipulating the market or something. And we are not fans of that worldview here at the Morning Brief.

Instead we think it is simply worth acknowledging and accepting as this week winds down that this market is simply different.

Right now, we’ve got a market that moves on memes.

Two weeks ago it was GameStop (GME). Then it was silver. This week the meme has been weed stocks. Next week will bring another.

The influx of retail traders playing in the market is also no longer in doubt. All that’s left to debate are the varying degrees of how much this bid “matters” in the market.

“The retail investor is increasingly becoming the marginal buyer of equities,” said strategists at UBS in a note to clients published earlier this week.

“Even during the peak COVID-19 sell-off, the share of retail volumes jumped. So far in 2021, the retail share of total volumes is 60% higher than it was in 2018.”

Retail's role in the stock market has exploded this year and the role this investor plays in the market can no longer be ignored. (Source: UBS)
Retail's role in the stock market has exploded this year and the role this investor plays in the market can no longer be ignored. (Source: UBS)

And then there’s crypto adoption, and specifically the role Bitcoin (BTC-USD) now plays for corporates. This uptake isn’t accelerating; it is exploding. To guess at an endpoint for the role Bitcoin or other cryptocurrencies play in the global financial system is to likely underestimate the future.

In an interview on Yahoo Finance Live on Thursday, we asked BTIG strategist Julian Emanuel if this is the most interesting market he’s seen in his career. And his answer, in a word, was “Yes.”

But his full answer really helps illustrate how for market veterans like himself, the current environment calls for thinking differently about whatever it is investors had told themselves would always be true in the world of finance.

“So I've been doing this quite a while,” Emanuel said. “I was a proprietary trader in 1999 and 2000. And, frankly, I thought that I had seen it all at that point, but there's no question about the fact that the last year — and in particular the last three or four months — have been absolutely fascinating, and the benefits of living in the same house with a 23-year-old and a 20-year-old who are actively engaged in social media and investing themselves have been incalculable in my ability to understand it.”

By Myles Udland, a reporter and anchor for Yahoo Finance Live. Follow him at @MylesUdland

YAHOO FINANCE HIGHLIGHTS

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CEOs to employees: Stay home until at least September

SkyBridge's Scaramucci puts $100,000 price target on Bitcoin, sees more money managers and CFOs adopting it

Editor’s Note: The Morning Brief is observing Presidents Day on Monday, Feb. 15. We’ll be back on Tuesday, Feb. 16.

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