GIULIETTA TALEVI: Stock trading accounts go ka-ching as Americans get their $1,400 cheques
Meanwhile, South Africans are receiving neither a direct cash injection nor an actual vaccine injection from the government
What would you do with a $1,400 stimulus cheque, sent by the government?
Pay rent? Buy food? Pay off your student loan?
Are you mad?
Of course you’re not going to do that: you’re going to put it in your Robinhood trading account and buy more Tesla shares.
Essentially, all US workers who earned less than $75,000 in 2019 will get a cheque of $1,400 — and that money arrived on Wednesday and Thursday. The stimulus, in other words, has landed.
That tide of money is now making its way from Capitol Hill to retail brokerage accounts everywhere in the US — and you can practically hear the short sellers sweating in their, well, shorts.
According to this article in the Financial Times (FT), stimulus payments — part of the mammoth $1.9-trillion package signed into effect by Joe Biden — will add “fresh fuel to a retail trading frenzy” that has swept Wall Street.
The FT says individuals with online brokerage accounts “plan to place more than a third of their cheques into equities — a total injection of up to $170bn over time, Deutsche Bank said in a report last month”.
“There is a group that is seemingly taking this stimulus and is not investing it in the economy,” said Andrew Slimmon, senior portfolio manager at Morgan Stanley Investment Management. “They are investing it in the markets.”
You can almost hear the outraged tut-tutting from all the way down here in SA.
Primed to cash in on these payments, online brokerage Robinhood is offering credits ranging from $10 to $250 for deposits ranging from $200 to at least $15,000, according to this article from Bloomberg.
Bloomberg also has this fun read on what to do with your “stimmy”.
Nonetheless, the investment tips it provides are great, and apply equally to investors here in SA — even though we’re receiving neither a direct cash injection nor, it seems, an actual vaccine injection from the SA government.
I’m sure you don’t need reminding how far we’ve fallen behind countries like the US or the UK, where an incredible 25-million people — and counting — have been vaccinated in the past 100 days. Just this week, UK health secretary Matt Hancock said the country was on track to give first Covid shots to all adults by the end of July.
SA’s vaccine train, meanwhile, hasn’t even left the station.
*Talevi is the FM's Money & Investing editor.
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