2021 was a pivotal year for retail investors, but I’d stop short of generalizing that it was a universally positive one for investors. Whereas last year’s pandemic “dip buying” was almost universally lucrative for investors, not everybody was a winner this year.
That might surprise some of you, especially since 2021 was the year of the “retail revolution” — investors caused a stir on Wall Street in January during a campaign of market volatility, which was the result of retail-related activity organized in forums such as r/wallstreetbets and Stocktwits. And yes, many retail-popular names performed strongly… until they didn’t.
There’s lots of different ways you can reflect on retail’s success (or lack thereof) in 2021. However, one of my favorite metrics is the Top 100 stocks on Robinhood. In 2020, I spent a fair few months laboring over user holdings data from the Robinhood API and writing a newsletter about findings in a newsletter for Robintrack.net. Robinhood ultimately pulled the plug on its publicly-accessible API, but I still toil away on Robinhood’s very own Top 100 stocks list in search of insights (and new names.)
Here’s the post-mortem from 2021:
There were 27 new names on the Top 100 list in 2021. From what I could ascertain, five were SPACs and four were IPOs.
The five SPACs were $DWAC (pending merger with Trump’s Truth Social), $LCID (formerly Churchill Capital IV), $CHPT (formerly Switchback Energy), $CLOV, and $SOFI (formerly Chamath’s IPO-series SPACs.) The four IPOs were $RBLX, $RIVN, $COIN, and $HOOD.
Some of the names that made the shortlist included stocks which endured a fairly paltry 2020. The best-performing of the Top 100 stocks was AMC Entertainment, which rose over 1250% in 2021. It was down 71% in 2020. Among other strong names with poor 2020 performances were $GSAT (-41.4% in 2020), $NAKD (-88.5% in 2020), and $BB (+1.69% in 2020.)
And notably, the new inclusions featured three ETFs — $SPY, $QQQ, and $ARKK. It’s a sign that Robinhood investors are increasingly putting their money on autopilot, embracing a mix of passive, active, and self-managed trading strategies.
Joni Mitchell once famously sang, “Don’t it always seem to go that you don’t know what you got ‘til it’s gone?” As it turns out, we definitely know a few names that dropped from the list this year.
Among the highest-performing former members of the list were oil plays — $UCO (+147% in 2021), $GUSH (+126%), and $USO (+67%)
A number of financial stocks also fell out of vogue with retail investors, such as $WFC (+62% in 2021), $APR (+38%), $MFA (+21%). $BRK.B (+30%) and $RKT (-30%), while not traditionally thought of as financials, also fell off.
EV & battery names also didn’t fare too kindly, which can be partially blamed on underperformance in growth stocks. Given strong 2020 returns in stocks such as $BLNK (-29% in 2021) and $SOLO (-65% in 2021), their 2021 underperformance was not all that surprising.
There were also two acquisitions of note, which fell off the list. They were Fitbit (acquired by Google) and Slack (acquired by Salesforce.)
Given these picks, Robinhood investors’ appetite for risk has not changed all that much in a year. That’s unsurprising, but that means that Robinhood users likely struggled in the last few weeks as stocks briefly regressed given concerns about the macro situation (Omicron, Fed decision, etc.)
The percentage of all stocks above their 200DMA fell to the low-30s in recent weeks (pictured below in orange), but more than half of the names in the S&P 500 (pictured in blue) stayed above their 200DMA over the same period.