Institutional Investors Are Hiding & Retail Investors Are Hunting For Opportunities

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Yet, investors are pouring capital into their favorite trade: AI stocks. The rapid allocation back into these high flying equities has as much to do with the macro environment as it does with the underlying stocks themselves. On the macro front, investors are coming to terms with the idea that a war in Iran is going to have little to no effect on software technology companies. Could various forms of electricity needed for data centers get more expensive? Sure. But that is still a very small impact on the behemoth corporations that are printing cash at a pace never seen in human history. We can also see the company-specific announcements driving increased investor demand as well. Meta is reportedly going to lay off 20% of their workforce and the stock jumped more than 2% yesterday. Nvidia jumped 1.6% after CEO Jensen Huang announced new components at their conference yesterday, before saying the company expects to do $1 trillion in revenue for its newest chip by the end of 2027. $1 trillion! Tesla and Micron were both up on the day after making separate announcements about various production facilities that each company is building related to AI chips and memory. The news was fast and furious all day, but investors were prepared with plenty of dry powder as they poured capital back into the darlings of the stock market. And I wouldn’t expect the stock market to start underperforming today. Carson Group’s Ryan Detrick points out that St Patrick’s Day is historically the 7th best performing day of the year. Just look at all that green: But the structural bull market in equities has some investors wondering what could happen in other areas of the market as geopolitical uncertainty persists. Brian Sozzi writes that according to the Bank of America fund manager survey, it appears “smart money [is] raising cash, [and] not expecting much on the economy.” But all this raising of cash by fund managers is probably just another opportunity for smart investors to buy the dip. Creative Planning’s Peter Mallouk reminds us “Over the last 75 years, the average intra-year market drop has been 14%. If you are overly stressed out about the current 5% drawdown, the stock market isn’t for you. Downside volatility is the price investors pay for long-term outperformance.” And if you are hoping the Federal Reserve will bail out the market with significant rate cuts, which is what they should have been doing over the last few months, Bob Elliot highlights that history shows us a Fed cut is unlikely. He writes “there is a lot of hope that the Fed will cut further in response to this oil shock to support growth. Even a quick look at history shows at best the Fed pauses, and at worst hikes come to fight inflation.” The increasing complexity of the current situation has institutional investors on their back foot. They may be pouring cash into AI stocks, but otherwise they are playing defense. It is hard to take big risks when the market is gyrating in this way. You don’t want to go tell your LPs how you screwed up their returns by trying to be the hero. It is much easier to take what the market gives you and simply claim “geopolitical volatility” drove your portfolio down with the market. Individual investors are in a different situation. This is where sophisticated retail investors shine. They take big risks. They buy the dip. Volatility is their friend. They are hunting for opportunities when everyone else is scared. You have to love the cowboy nature of the people with real skin in the game. They are putting their own personal money at risk. They are trying to better their financial situation. There are two types of investors in the world: those who run from risk and those who run towards it. This week is a perfect example of the how the difference shows up in the market. Have a great day. I will talk to you next time. - Anthony J. Pompliano Founder & CEO, Professional Capital Management Legendary Trader Reveals the Real Secret to Making Money Tom Sosnoff is a veteran trader and entrepreneur, the founder of LossDog, and the builder of multiple billion-dollar companies. In this conversation, we discuss why volatility creates opportunity, how he thinks about active investing across asset classes, and why he believes crypto deserves a place in every portfolio. We also talk about options trading, oil and commodity volatility, the rise of self-directed investors, prediction markets, AI’s role in portfolio construction and financial advice, and how Tom is thinking about building the next generation of investing tools. 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