10 Great Reasons For High Retail Participation In Stocks

Great Reasons For High Retail Participation In Stocks. A group of small traders & investors representing the concept of shareholding pattern in stocks.

(6) Cheap & Undervalued Stocks

It is one of the cost-effective reasons behind high public shareholding pattern in stocks. Most of the daily trading volume in share markets is due to large cap companies.

These large cap companies are usually the major contributors of major exchanges such as Dow Jones, Nasdaq, S&P 500, Nifty, Nikkie, and many more.

Therefore, small cap stocks are largely ignored by high frequency traders. This results in the availability of cheap & undervalued stocks for small investors.

On the other hand, big institutions or fund houses can’t invest in such stocks. It is due to the presence of strict stock investment guidelines.

According to these guidelines, they can’t invest in stocks until it reaches a certain predetermined size or produce a reasonable track record. However, small investors don’t have such guidelines for stock investment.

They can buy stocks that are flying under their own radar with a strong potential to show explosive growth. It is a risky step by them. These potential stocks are unlikely to move much until it catches the sight of big investors irrespective to its growth potential.

[Read Also: 20 Tricky Ways To Identify & Avoid Value Traps in Stocks]

(7) Retail Investors Got Stuck At Higher Prices

It is one of the most authentic reasons for high retail participation in stocks. Stocks can show huge rise & fall depending on news & speculations.

Retail investors are often the last person to get stock specific news. This delay in receiving news or absence of reliable sources often results in losses.

Small investors or traders usually get stuck at higher share prices. They find it difficult to exit their positions or even book losses at cheaper stock valuation.

Several small investors may even start averaging by buying more stocks to bring down their average buying price. However, if the stock keeps on sliding for some more time then it may attract more small investors.

These new, unskilled & inexperienced traders also get stuck in such stocks. It results in increasing the shareholding pattern of general public.

Thus, you should always trade stocks cautiously as per prevailing trend in the markets.

Image Source: Shutterstock

Recommended Posts

About Editing Staff
At GetUpWise, we are a team of professional writers from different areas of subjects. We are conducting thorough research on each & every topic from highly reputed sources before writing any piece of article. Once research is done, we try our best efforts to provide informative piece of articles in an easy to understand manner. It is something that is extremely essential to meet our goal while reaching & offcourse building a strong online community. We do update our articles from time to time in order to provide the most latest information quickly. Thus, our articles can be used as a "way to gain smartness".

Leave a comment

Your email address will not be published.



This site uses Akismet to reduce spam. Learn how your comment data is processed.

Get Instant Access To GetUpWise Posts

Subscribe Us


Please do verify your email address by clicking a link sent to your email.

More in Stocks & Mutual Funds
Things High Public Shareholding Pattern Reflects In Stocks.
14 Things High Public Shareholding Pattern Reflects In Stocks

(6) Cheap & Undervalued Stocks It is one of the cost-effective things high stake of small investors reflects in stocks....