As FOMO is reignited by the 2023 rally, retail investors have been investing a record $1.5 million per day in stocks.

According to Vanda research, retail investors have been investing a record amount in the US financial markets. This has driven their cash towards ensuring that they don’t miss stock gains made so far this year.

According to the firm, individual investors have poured $1.51 trillion per day into the US markets in the last month, which is the highest ever recorded, according to Thursday’s report. VandaTrack monitors retail investment activity in more than 9,000 stocks, ETFs and other US securities.

These waves of money have contributed in a continuing drive for market swings since 2022’s second half.

These swings have led to the S&P 500 increasing 18% from October’s lows. The index has increased almost 8% in that time frame, despite a sharp 19% drop last year.

Retail investors held a strong hold on Wednesday, when the S&P 500 came out of the red to finish slightly higher. Vanda stated that total net US securities purchases exceeded expectations by a substantial margin on Wednesday.

In a weekly report, Marco Iachini, Senior Vice President of Research at Vanda stated that this type of behavior suggests that retail traders are FOMO-ing much more than any recent sentiment survey would suggest. A separate study by Ned Davis Research has shown that investors are tempted to reinvest in stocks because of the fear-of-missing out trade.

Stocks have been widely criticized by professional investors. While retail investors are generally more cautious, they appear to be well-funded and have a good record of buying equities.

Iachini stated that this is in line with January’s retail sales and jobs data, which suggests that consumers still have impressive levels of purchasing power. While it’s not clear if this is due to a strong job market or extra savings from pandemic stimuli, investors should listen to the signals from the “unsophisticated money” crowd.

Vanda sees a decline in retail cash flows as a future trend. According to “Seasonality”, March and April are usually middle-of the-road months in the calendar year.