Rush to stocks continues amid retail frenzy, BofA data show

Investor cash continued to pour into stocks last week amid a retail trading frenzy that saw shares in GameStop (NYSE:GME) soar over 2,500% year-to-date at one point, BofA’s weekly flow data showed on Friday.

Inflows in the last three months soared to a record $272 billion. U.S. small cap firms, at the centre of amateur trading, saw their second-largest inflow ever, of $29 billion.

Crowds of solo traders herd buying, pumping up and squeezing out hedge funds from their bets against ailing companies, have shaken financial markets in the past week, with analysts worrying about the systemic implications of a retail speculative bubble bursting.

BofA analysts compared this new trend, often described as a populist market revolt, to the 2011 “Occupy Wall Street” movement against financial inequality.

“Our secular view is inequality can only end via higher wage inflation for poor and wealth taxation for rich”, they commented in their weekly note.

BofA analysts added they expected to see a 10% correction in equity markets in the coming months as the COVID-19 vaccines are rolled out.