In the past few months, my parents have become obsessed with Zoom. Not for its software, which facilitates our family’s biweekly video calls, but for its stock, whose wild ride has at times made them thousands of dollars in a matter of days.
After years of clipping coupons, scouring sales and stashing their savings in index funds, my mother and father have turned into avid day traders amid the pandemic.
They’re not the only ones. The ranks of amateur day traders have swollen this year, helping to create a record number of new accounts at brokerages like
and TD Ameritrade. By some estimates, such small-scale speculators now account for as much as a quarter of overall trading activity.
As their presence grows, so do the warnings about the risks they pose, both to their own finances and to the stability of the broader market. While it’s difficult to pin down their exact impact, a rush of inexperienced traders tends to cause alarm among institutional investors, who take increased retail trading as a sign of rising speculation and worry that a sudden turn in sentiment could send the market spiraling. Retail trading booms have presaged dramatic busts in recent decades, such as the dot-com bubble in the late 1990s and the cryptocurrency craze a few years ago.
During my four years writing about financial markets for The Wall Street Journal, my parents and I almost never discussed stock trading—in fact, the newsroom has strict rules about journalists’ investing activities and I don’t dispense advice about markets. When I returned to Iowa to visit them in August, it was all they wanted to talk about.
“What do you think of
?” my dad asked one evening. My younger brother and I made eye contact over the dinner table, both startled and amused. “Dad, please don’t buy Tesla,” I said. “Why not?” he insisted. “You don’t know anything about the company,” I exclaimed. I wasn’t concerned about Tesla Inc. as a specific investment as much as I was about my dad buying shares in a company without having enough information about it.
“It’s too high now,” my mom said. “Maybe when it comes down a bit more,” my dad agreed.
When your parent also wants to be your financial adviser. Messages to the author’s brother from their mother, shown in gray.
Photo:
Stephanie Yang/The Wall Street Journal
Both of them ended up buying Tesla shares. My dad purchased
Nikola Corp.
too for good measure.
Their sudden about-face shocked me. Born in a rural village a few hours outside of Beijing, my father came to the U.S. in 1985 for his graduate degree in engineering. My mom joined him shortly after, and worked side jobs such as waiting tables and filing taxes while raising three kids.
I was in high school when my mom started showing me charts and statistics emphasizing the value of saving. As I’ve gotten older, they’ve pushed me to save even more, urging me to sock away at least 10% of my paycheck in a 401(k) or snatch up employee discounts on company stock, and chiding me for spending too much on shoes and the like.
Their frugality yielded enough savings to send my two brothers and me to college without student loans, and for my dad to retire in September, ahead of his 59th birthday.
Which now gives him more time to trade stocks while my mom is on the clock. “The stock market is closed. So I’m off work too,” he joked when I called home one weeknight.
Before this year, my parents had only dabbled in individual stocks. Mostly they built up their nest egg in retirement accounts and index funds. Now, with their children grown and financially independent, they suddenly felt that they could handle a bit more risk.
Like others around the world, they have had all their travel plans negated by the pandemic, leaving them with more disposable income and very little to do. As trading has become more mobile and, moreimportant, free, it became easier for them to jump in.
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