Robinhood customers purchase and maintain corporations ‘they know, perceive and consider in for the long-term.’ Listed here are their favourite shares.

All of it reveals Robinhood customers are shopping for — and holding onto — corporations “they know, perceive and consider in for the long-term,” the corporate mentioned in a Friday morning announcement unveiling the Robinhood Investor Index.

“The Index captures how our prospects are investing primarily based on the highest 100 most owned shares on Robinhood,” the corporate mentioned in a press release.

“In contrast to most different indices, it isn’t weighted by {dollars}, however by conviction. We measure a buyer’s conviction for every funding by trying on the share it makes up of their portfolio,” Robinhood added.

“And to make sure that all prospects are equally represented, we common conviction for every funding throughout all prospects, whether or not they have $20 or $20 million of their account,” it added.

“The index doesn’t mirror the positions or efficiency of anybody particular person investor, however slightly it’s an mixture view of what our prospects are investing in on a relative foundation,” Robinhood mentioned, noting that it’ll replace the index month-to-month. (The index doesn’t embody exchange-traded funds or cryptocurrency.)

As institutional and retail buyers grapple with unstable inventory markets and assess the possibility of a recession, Robinhood is hoping there will be worth in customers seeing the place others are placing their cash.

For all of 2021, the 100 most broadly held shares for Robinhood customers beat the general efficiency of the Nasdaq Composite, and now the 2 are primarily on par, in accordance with Robinhood’s information.

The Nasdaq
COMP,
+2.11%
is down almost 23% yr thus far. The Dow Jones Industrial Common
DJIA,
+1.19%
is down virtually 12% and the S&P 500
SPX,
+1.53%
is off by 15% in that interval.

“Validation is de facto form of essential to a section of our buyers, and they also’ll discover this very precious,” mentioned Steve Quirk, Robinhood’s chief brokerage officer.

Put one other means: Validation is successfully figuring out {that a} sure group of persons are taking the identical method; for some, it helps to really feel like they don’t seem to be alone.

After all, there will be pitfalls in fully following what others do, however Quirk famous the index is only one information level to tell buyers’ selections.

Different gauges paint a depressing view of fairness markets. Greater than half of individuals voted that inventory costs will decline within the coming six months, in accordance with the newest sentiment survey from the American Affiliation of Particular person Traders.

However that could possibly be a ‘purchase’ sign, as a result of the group views the sentiment survey as “a contrarian indicator” as, for instance, a chance for worth.

In all, essentially the most represented sectors within the index embody client durables, know-how and client providers, Robinhood mentioned.

In early 2021, shares in meme shares like GameStop soared in worth, buoyed by social media help from locations like Reddit’s WallStreetBets.

However Robinhood got here beneath intense criticism when it briefly halted purchase orders for GameStop and different corporations throughout the buying and selling frenzy. It was a essential step due to collateral necessities, CEO and co-founder Vlad Tenev later mentioned, additionally emphasizing that the extensive majority of Robinhood customers have been purchase and maintain buyers as an alternative of merchants eyeing short-term performs.

Now Robinhood has a brand new problem: Tough stock-market situations are hammering consumer portfolios and presenting headwinds for the corporate itself. Final month, Tenev introduced plans to chop workers by 23% on account of weakening financial situations that have been crimping buying and selling exercise and decreasing the worth of their holdings.

Property beneath custody dropped 31% from the primary quarter to $64.2 billion within the second quarter, Robinhood mentioned in its second quarter earnings outcomes.

Robinhood
HOOD,
+4.95%
shares are down virtually 40% yr thus far.

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