This is a misconception that most people have about the markets where it is considered that major and large scale institutions and financial players are the main drivers of the markets. In fact, these are the individual investors that have a strong bearing on the market, and we see how the dynamics is affected.
To begin with, it begins with the so many people making decisions to either buy or sell stocks at the markets. Each time large numbers of people go trading in stocks, their activities can have a direct impact on the value of their choices. This phenomenon became especially apparent when the ‘small investors’ were involved – for instance, during the surge in retail trading applications, where the groups of small investors were able to manipulate prices in a spectacular manner, like in the case of the ‘GameStop affair’ in early 2021.
Secondly, individual’s action also influences market sentiments that is has a central role to play in market dynamics. These attitudes and feelings are aggregated to represent the sentiment of all the players in the market as well as individual sentiments like that of this cohort of invaluable individual investor. This means that when people have a positive attitude towards the stock more people will adapt it causing an increase in prices, on the other hand, negative attitude will cause the prices to nose dive. This effect has been especially apparent in the social media and relevant online boards where individual investors are quickly passing information and giving their opinions unlike in the past.
Further, it is the individual investors who may be embracing new plans and novelties in the market. What it offers is commitment to seek out and support new industries that can exert a positive influence on traditional sectors, like supporting renewable energy or technology startups which in turn can help promulgate new industries. This grassroots support thus plays a major role in establishing the brands and initial pushes new industries into position in the economy to shape the usage of capital.
Finally, the remainder of individual investors helps to make the market structure more active and stronger. Self interest is also a force for good in the market because every individual contributes his/her disparity and approach towards the market’s stability and expansion.
Hence, people are useful and crucial in decision-making processes of the market. Overall activity, feeling, and openness to the new trend would have a major impact as they manifested and proved that each and every participant affect the market regardless the small size of the company.