Retail investor bubble; What's happening?

Over the last few months, I have personally never had as many friends ask me if stocks such as Air New Zealand “are good shares to buy right now”. Many of them have never bought shares before.

This “on the ground” experience has highlighted to me just how real the current retail euphoria in stock markets is, and prompted me to investigate how big an impact retail investors are having on markets and the subsequent implications for investors.

So, what has driven this meteoric rise of the retail investor? 

There are a few factors at play. Pre-covid, share trading by small investors had already been showing good growth. The rise of discount broking platforms and introduction of commission-free trading in the 4th quarter of last year led to an increase in overall volume trading, with a number of slicker platforms that facilitate easier trading. Fractional share ownership allows retail players to gain equity exposure without overly committing capital, reducing barriers to entry involved with share investing.