This Time It’s Different!?

Have retail investors changed markets?

September 2021. Reading Time: 10 Minutes. Author: Nicolas Rabener.


  • Options trading has increased to record highs
  • Some data points indicate changes in the market structure
  • However, these changes are likely temporary rather than structural


During the 1954 recession in the U.S., Sir John Templeton wrote to his clients that “this time it’s different” are the four most dangerous words in investing. A pedantic reader might comment that it’s actually five words, but that’s beside the point.

The current investing world is odd indeed and perhaps this time it’s different: interest rates are zero, central banks manage stock markets, start-ups with unrealistic plans to make money are valued at billions, the market cap of cryptocurrencies has breached a trillion dollars, zombie companies like GameStop have been rejuvenated, and so on.

Some of these themes are attributed to an increased participation of retail investors. Overall, their market share of trading stocks and bonds has steadily declined over the last decades as professional money managers have taken over. However, occasionally they strike back.

In 2000, the lure of making easy money with technology stocks created an entire generation of day trading retail investors. In 2020, the combination of being confined to their homes, free government money, and free trading apps, has brought retail investors back to the game table. 

Some market participants argue that retail investors have changed markets. Have they?


There are many ways to show the interest and increased participation of retail investors in capital markets. Modern measures are analyzing certain search terms like “crypto trading” on Google Trends, compared to traditional ones like investor surveys. In this analysis, we will focus exclusively on market-derived data and start with options trading (read Option-Based Strategies: Opt In or Opt Out?).

Retail investors like options given the potentially outsized returns while trading apps like Robinhood market options aggressively as it is financially more lucrative than stock trading. We