According to Financial Investment News on November 13th (Editor Xiaoxiang), this year can be considered a record-breaking year for usa stocks, especially the impressive surge of major stock indices after the US presidential election - as shown in the following chart, as of the beginning of this week, the s&p 500 index has the largest increase since 1995 for the same period in a year...

However, it is regrettable that many American retail investors may not have seized this once-in-a-decade money-making opportunity!

As Morgan Stanley strategist Emma Wu recently calculated in a research report, the investment return of retail investors since the beginning of this year is only 3.7%, marking the worst performance in years of double-digit gains in the large cap market since 2015...

The disconnect between the stock market and the retail army indicates that in a year where almost every corner of the stock market has set historic highs, wrong market timing has led to significant losses. In addition, retail investors have shown relative caution towards financial and technology stocks (the top gainers in the market in the second half of the year), while showing a stronger preference for meme stocks with higher volatility, which has almost not helped their portfolio returns.

Carley Garner, Senior Strategist and Founder of DeCarley Trading, stated, "The adjustment in early August may have scared them (retail investors), causing them to sell stocks at a low price, and it was difficult for them to rebuild these positions after a significant price increase."

She added that in the exciting market atmosphere, retail investors have increasingly adopted more complex strategies, "they may not have fully understood or realized the risks involved."

During this period, retail investors may have made the following "mistakes":

Firstly, they heavily favor meme stocks and ignore financial and technology companies. Compared to the weight of these two types of companies in the S&P 500 index, they do not hold enough stocks.

Unfortunately, financial stocks became the sector with the largest increase in the second half of the year in the S&P 500 index.

Retail investors also reduced their holdings of technology giants Nvidia and Tesla in early August, but since then, the stock prices of these two companies have risen by at least 47%.

What's even worse is that retail investors have not significantly increased their positions thereafter. Vanda Research, which focuses on studying retail investor behavior, has provided several potential reasons for why retail investors are not entering the market:

Looking at the mid-term, mean reversion of fund flows is a possible factor (please note the significant capital invested by retail investors during the August drop in the US stock market);

Even in the short term, retail purchasing power remained stable before the presidential election, reducing the impetus to chase subsequent gains;

In November, market liquidity tends to experience seasonal declines;

On an overall level, retail investors historically tend to show some restraint when nearing historical highs (of course, the situation may vary for individual stocks);

The large profit-taking in some key industries has had an impact on the overall net inflow data.

eToro investment analyst Bret Kenwell pointed out that part of the reason for poor performance by retail investors may be related to their preference for cash.

"Retail investors still have a soft spot for cash and cash-like securities because it gives them a sense of stability. Surprisingly, this situation is very common among young investors," Kenwell said.

In a survey conducted by the company, about 42% of retail traders said they plan to increase cash holdings before the US election. Only about 35% of traders said they plan to buy more stocks, and 20% plan to increase investments in cryptocurrency.