It has been just over three months since the March market lows and many are worried about the dislocation between the real economy and the stock market. Not only is the S&P500 index up over 40% since late March, but the NASDAQ is sporting double-digit gains on the year, even while many anxiously wait for economic activity to return to some form of normal.

Politicians will credit the market upturn to the enormous stimulus packages and perceived success of social lockdown to get us to this point of reopening the economy. This may be true. I believe, however, that the incredible rise in online stock trading is a big factor contributing to this market disconnect.

It’s a fascinating development to watch while being cringeworthy at the same time. Retail online trading is hardly new, of course, but what is new this time around is that many of the people now entering the market clearly have NO IDEA what they are doing. Need some proof? Stocks that retail investors tend to favour have outperformed the S&P 500 by 30% since mid March¹.