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Small Investors Gaining Favor Among Companies

  • Companies work to curry favor with smaller investors as they gain power during the COVID-19 pandemic
  • More people dabble in retail trading during the COVID-19 pandemic
  • Businesses have modified their strategies to better appeal to these investors, which can be more suited to long-term success

Summary by Dirk Langeveld

Smaller investors have been gaining favor among businesses, causing them to modify their strategies to be more approachable to the general public.

A recent New York Times article notes how the power of individual shareholders has waned in recent decades, with larger fund managers gaining more favor among corporations. But during the COVID-19 pandemic, more Americans began dabbling in the markets, assisted by free trading apps. Wall Street was also rocked by “meme stocks” disruptions, in which individual traders coordinating through Reddit were able to boost the value of several companies.

Although individual interest in the markets may be diminished after the pandemic, companies are nevertheless modifying their business strategies to better connect with retail traders. These efforts include being active on message boards, social media, podcasts, and other channels popular with individual traders.

One advantage of this approach is the creation of a extensive base of devoted followers. The article notes how this can be more useful in fostering long-term success than focusing on short-term metrics.

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