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Just how mighty are active retail traders?

They are a force to be reckoned with. But most punters are still pretty boring


Just two years ago the future of investing seemed to involve fewer and fewer people. 

Retail investors were piling into “passive” index funds, which track a broad basket of stocks for a tiny fee. 

Active fund managers, whether swaggering hedge-fund gurus or staid mutual-fund bosses, were in retreat as index and quantitative funds swelled. 

More automation seemed inevitable. 

A future in which human investors vanished altogether, replaced by slick, powerful machines swapping shares at near-lightspeed seemed just around the corner.

That is not quite how things have turned out. 

A mass of active retail traders have been romping around the American stockmarket for more than a year. 

They piled into short-dated derivative bets on Tesla, an electric-vehicle maker, and bid up shares in Hertz, a car-rental firm, after it went bankrupt. 

Early this year came their pièce de résistance: a frantic rally in the shares of GameStop, a video-game retailer, which rose by 2,000% in a little over two weeks. 

So volatile was the share price and so large the flows that the stock-settlement system nearly broke.

The proximate causes for the retail renaissance are hard to disentangle. 

Lockdown-induced boredom and stimulus cheques are often cited as fuel for the active retail investor. 

But the pandemic swiftly followed a price war in October 2019, when America’s largest brokers all cut commissions to zero, copying Robinhood, a digital upstart. 

And retail access to sophisticated trading tools, such as leverage and derivatives, has long been growing. 

Between October 2019 and February 2020 trading volumes at retail brokers almost doubled from a low level, before doubling again once lockdowns began.

Almost two years on from the price war it is clearly much more fashionable to be obsessed by the stockmarket and hang out on Reddit swapping tips than it is to be coolly indifferent. 

But how big has the shift towards active retail trading really been? 

Is passive now passé?

These questions can be answered in three ways. 

The first is by examining the number of retail traders. 

In 2019 around 59m Americans had accounts with one of seven of the largest brokers. 

This number has surged since to 95m, as 17m new accounts were opened in 2020 and 20m were set up this year.


Next, consider trading flows. 

These suggest an almighty spike. 

Retail trading went from around a quarter of volumes to a third in early 2020 and peaked at over 40% in the first quarter of 2021 (once marketmakers, who stand in the middle of every trade, are excluded). 

The plurality of trading activity now comes from retail punters, not institutions, quants or banks.

Third, look at asset holdings. 

According to Goldman Sachs, a bank, the share of American stocks held directly by households has been falling for decades as investing has become dominated by professionals. 

In the 1970s and 1980s pension funds rose to prominence, before active mutual funds gained market share in the 1990s and 2000s. 

Over the past decade passive funds have gobbled up assets. 

But the share held by households directly began to stabilise around 2015 and is climbing again: between the end of 2019 and March 2021 the share of stocks held by households climbed from 36% to 38%.

All this makes the active retail surge seem vast. 

But two things should give you pause. 

First, the rise of the active retail investor has not derailed growth in passive ones. 

Though the total slice of equities passively tracking an index is hard to measure, the share of the s&p 500 held in exchange-traded and mutual index funds has risen by around 0.5 percentage points since 2019, to 18.3%. 

That is slower than in preceding years, but still a relentless march upwards.

Furthermore, not everyone who has opened a brokerage account since 2019 is a day-trader. On average the 32m account holders at Charles Schwab (which recently merged with td Ameritrade) trade around four times a month. 

This is more active than Vanguard customers, who seem positively idle (three-quarters of them do not trade at all in a year) but leisurely compared with the 34 or so trades that the 1.5m customers of Interactive Brokers, another retail broker, make every month.

Active retail traders, then, are clearly a force to be reckoned with. 

And if their ascent was prompted by the structural changes to access to trading rather than a passing pandemic fad, then they will remain so. 

Yet it is worth remembering that most retail investors still trade at a sedate pace.

War will shape the future of the US industrial base

Chaotic withdrawal of troops from Kabul raises questions about America’s future economic path

John Dizard 

Refugees who fled Afghanistan in 1996 hold the American flag as they attend a rally in front of the US Embassy in Bishkek, Kyrgyzstan, on Thursday © AFP via Getty Images


The chaotic withdrawal of US troops from Afghanistan and subsequent events in Kabul this week prompted me to think about the connections between US defence policy and the country’s future economic path.

For years, political posturing in the US has revolved around notions of a future economy based on tax increases and borrowing for income redistribution and social equity; or tax cuts and borrowing to preserve private equity returns and property values.

Regardless of party lines, on one point, almost everyone agrees: they do not want to think about going to war.

Yet the US is already back on the battlefield. 

In the North Kivu province of the Democratic Republic of Congo, US special forces have recently been “inserted” on the ground to help the Congolese army fight a militia linked to Isis. 

There are humanitarian motives, no doubt, but as well as being a hotspot for Ebola, North Kivu is one of the places to get metals for batteries and advanced aircraft.

Your future mobile phone, electric car to the beach and protection from improvised bombs all depend on rare earths and minerals such as copper and cobalt. 

This is why I fear that US commitment to protecting them will grow and spread to other mineral-cursed places. 

Payment in money and blood for war and resources can only increase.

War has a habit of getting its own way. 

However, it will require that the US thinks differently about its industrial base in the future.

The impact of the pandemic has already prompted the administration to review critical supply chains. 

These cover a wide range of technologies and materials used in manufacturing that are important for industrial and military purposes. 

Current disruption has forced a rethink of the “just in time” production model, and building up inventories of critical components.

There is also geopolitical risk to contend with. 

The US is intent on reshoring some supply chains for chips and other strategically important products. 

So when it comes to the defence budget, there is bound to be a battle for resources.

By chance, I was in Washington when the last revival of the US military industrial complex was being planned, which, again coincidentally, was just when the country’s last great humiliating retreat was in train.

In early March 1975, I interviewed James Schlesinger, who was the secretary of defence under President Gerald Ford, on the subject of whether US weapons procurement policies made any sense.

Unknown to me, Schlesinger had determined the previous month that there would have to be an evacuation of Americans and Vietnamese dependants from Saigon. 

As was his usual practice, I’m told, he avoided going through the White House snake pit and ordered aircraft and navy ships on his own authority.

Consequently, before the fall of Saigon, the US was able to evacuate tens of thousands of people in a few days. 

We have not seen how bad the results from Kabul will be.

But even with that immediate problem at hand, Schlesinger was simultaneously working on the future direction of military technology and the development of defence research, development and the industrial base.

At the time, US society was demoralised and politically cynical, threatened by inflation and just emerging from the bottom of a severe recession. 

Schlesinger’s defence research, development and equipment procurement budget was down by almost half from its Vietnam war peak.

Yet in my interview, Schlesinger emphasised that he was tilting the department’s spending towards long-term R&D and procurement of long lead time parts, such as reactor housings for as-yet unfunded submarines, rather than immediately rebuilding the shabby state of the forces’ “readiness”.

Schlesinger was fired by the president in November 1975, partly for not bombing Cambodia when ordered. 

However, the military followed through on his long-term military-industrial plan.

Harold Brown, a nuclear physicist who took over the department under Jimmy Carter, quickly commanded the president’s time and the respect (Carter was educated in the nuclear navy). 

He continued Schlesinger’s strategic direction, and established the military-technological edge that Republicans credit to Ronald Reagan.

Schlesinger and Brown had cheap suits, cheap watches and engaged in harsh examination of their own assumptions. 

Those two were not always pleasing courtiers, but they believed in democracy and leadership as distinct from management by PowerPoint.

That edge they helped create may now have been permanently blunted. 

The modern military industrial complex is a wasteful and sometimes corrupt oligarchy, which — as recent events show — is in need of a rethink.

Today’s economists and politicians should be asking questions about where money and resources are allocated now and in the future, and how far spending priorities have shifted. 

The future of the US is tied to the future of the wars it involves itself in.

Pimco/Columbia Property: bond giant bets on a rush back to the office

Deal for real estate investment trust includes a portfolio of 15 sites and four under development


The future of the workplace is in flux. 

No one really knows what the new normal will be. 

Companies are trying to chivvy staff back into their offices. 

Many workers would prefer to stay at home. 

The balance between those opposing forces will determine demand for office space.

Pimco is betting working from home will be a passing fad. 

The big fund manager is buying real estate investment trust Columbia Property for $3.9bn including debt. 

The deal will hand Pimco a portfolio of 15 properties in New York, San Francisco, Washington and Boston as well as four projects under development.

Pimco is best known as a fixed-income manager. 

It has been seeking to expand beyond its core bond business amid falling bond yields and pressure on management fees. 

The group took over management of Allianz Real Estate last year, creating a combined real estate investment unit with more than $100bn in assets.

It is easier to make a contrarian bet when you are one of the world’s largest money managers and its relative scale is small. 

Pimco’s alternative investment strategies — which include hedge funds as well as real estate — still only account for 3 per cent of $2.2tn in client assets.

The acquisition of Columbia offers diversification at a low entry price. 

Pimco’s $19.30-a-share cash offer represents a 17 per cent premium to Columbia’s closing price on Friday.

The implied yield is a healthy 6.2 per cent, according to Lex calculations based on Columbia’s published numbers. 

That is over four times more than the current yield on the 10-year US Treasury note. 

It is in line with the yield produced by larger rival Vornado too.

Office tenants typically sign long-term leases. 

That provided US property owners with a measure of protection during the pandemic. 

Columbia for example has continued to collect 98 per cent of rents over the past four quarters.

But nearly half of Columbia’s leases will expire between now and 2025. 

Pimco is hoping company bosses will become increasingly resistant to staff demands to work form home and lead their battalions back to the world of strip-lit desks and water coolers.

National Egoism vs. Planetary Responsibility

A summer featuring unprecedented climate-driven disasters and a new warning from the world’s premier climate-science body has underscored the inadequacies of the existing order. Tackling the climate crisis is fundamentally incompatible with our understanding of sovereignty.

Joschka Fischer


BERLIN – The man-made climate crisis is generating headlines this summer. 

There were record-breaking heat waves along the US and Canadian west coast; torrential rain and floods (and significant casualties) in Central Europe and along the Yangtze River in China; and wildfires in Greece, Turkey, Southern Italy, Northern Africa, and even Siberia. 

And on top of all this, climate scientists warned this month that the Atlantic Gulf Stream – that great heat pump for Western Europe – may be slackening.

Moreover, amid this summer of extreme weather events, the Intergovernmental Panel on Climate Change (IPCC) published its sixth assessment report (which had been postponed because of the COVID-19 pandemic). 

In much more explicit language than in the past, the world’s premier body of climate scientists made clear that humankind – particularly in developed countries and large emerging economies – is responsible for global warming.

The report also raises serious questions about whether we can achieve the Paris climate agreement’s goal of limiting the increase in temperature to 2° Celsius (but preferably 1.5°C) above preindustrial levels. 

The IPCC concludes that this is still possible, but only if we act decisively and immediately to reduce greenhouse-gas emissions (particularly carbon dioxide) substantially.

Unfortunately, there are few signs that this is happening. 

And lest we forget, the Paris targets are relatively minimal goals that would only slow the climate crisis, not end it decisively. 

The countries that signed the agreement in December 2015 did so of their own volition and are free to set their nationally determined contributions as they see fit.

Presumably, some signatories secretly hoped that the climate crisis would develop more slowly and less intensely than it has. 

They lost that wager, and now the time for action is growing scarce.

The central conundrum of the climate crisis is that we must rely on the structures of a global system based on the egoism of nation-states. 

Joint action to fend off a common threat on behalf of all humanity must be taken through the narrower, older channels of sovereignty. 

The idea of global responsibility to maintain the basis for our common survival is alien to such a system. Coming to grips with this disconnect will be the great challenge of the twenty-first century.

In its assessment of the fallout that is yet to come, the IPCC implies that we must fundamentally transform the global economy within the space of the current decade. 

The technological and economic obstacles are enormous, but the political challenge is no less daunting.

The more obvious that the climate crisis becomes in people’s daily lives, the clearer it will be that we are running out of time. 

The issue increasingly will drive international politics, forcing a realignment away from traditional geopolitics and toward a new dispensation of joint planetary responsibility. 

After all, no state – no matter how powerful – can solve this problem alone. 

The task requires the solidarity and cooperation of all humankind.

Unfortunately, the history of our species shows that genuinely inclusive global cooperation is not one of our strong suits. 

Any chance of success under such time pressure will require the great powers to come together and demonstrate global leadership. 

That includes the two superpowers of the twenty-first century, the United States and China, but also the European Union, India, and others.

The current rivalry between the US and China is playing out mainly in the field of technology, a sector that is particularly important for addressing the climate crisis. 

The idea that humankind bears a planetary responsibility presupposes that it has the knowledge and power to control the biosphere. 

That will require comprehensive structures for compiling, sharing, and leveraging data – in real-time, if possible.

But, again, there are no signs of progress in this direction. 

On the contrary, a great-power rivalry has once again become the dominant factor in global politics and international affairs. 

State egoism continues to reign supreme, and it is not reasonable to expect two powers that are moving toward confrontation in all other areas to carve out areas for cooperation on climate change. 

Attempting to do so would most likely undermine, rather than bolster, the mutual trust that is needed to address the climate crisis.

To be sure, the West has made grave errors in its behavior toward China. 

In nakedly pursuing its economic interests, it willfully overlooked China’s geopolitical interests and intentions. 

But we should not amplify past mistakes by making new ones. 

Just as we should not return to the West’s old, flawed China policy, nor should we deny that the climate crisis must be at the strategic heart of international politics in this century. 

Otherwise, all of humankind will pay the price for our failures of leadership.

This is not the time to pursue traditional power politics. 

Today’s great powers must take steps toward embracing planetary responsibility. 

And to succeed, they must take these steps together.


Joschka Fischer, Germany’s foreign minister and vice chancellor from 1998 to 2005, was a leader of the German Green Party for almost 20 years.