Do Small Investors Move The Market?

Hi All,

It’s great to read and learn from many so thanks first for sharing your knowledge and experience.

I was reading this article from back in 2011; do small investors move the market? (Making Sense Of Market Anomalies).

Lots has changed since 2011 particular now with whatsapp groups, communications in general and now platforms like Freetrade, so the question is for example if 100,000 small investors sold £100 of shares on the same day in one company, would it move the market like institutional investors do?

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It depends on a whole range of things like market size, how many buys are happening at the same time, liquidity of the stock etc.

100,00 * 100 is 10 million so if you did it for Amazon it wouldn’t move the needle.

If you did it for a AIM company, the violent swing will more than likely cause the stock to be suspended.

I cannot find any details on what triggers AIM shares to be suspended but RBS shares were suspended when they dropped by more than 8% in 2016, this was caused by Brexit. In this case there was billions of £’s of shares sold to cause this.

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As @saf outlined, purely depends on the market cap. I doubt that small AIM company will attract 100,000 investors to transact within a day, purely due to low awareness.

Your numbers would represent transactions totalling £10m. Considering the LSE companies’ total market cap is about £4tn and there are 2,600 of them, it is roughly £1.5bn per company.

£10m of intraday transactions would represent mere 0.67% of the total value, hence will essentially make no effect considering that 1% - 5% daily swings are a norm.

Therefore, most impact is made by institutions: pension funds, sovereign states’ national savings, other mutual funds and corporations storing their cash in the market. Individuals simply cannot be more impactful.

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