Retail Raw: Wisdom of the Robinhood Crowd and the COVID Crisis

45 Pages Posted: 21 Sep 2020 Last revised: 30 Sep 2020

See all articles by Ivo Welch

Ivo Welch

University of California, Los Angeles (UCLA); National Bureau of Economic Research (NBER)

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Date Written: September 29, 2020


Small retail investors at the Robinhood (RH) retail brokerage firm from 2018 to 2020 shared with Finnish and larger US investors from the 1990s a preference for extreme recent winners and losers. Interestingly, this preference held even for the overall stock market during the March-2020 COVID crisis, indicating an absence of panic and margin calls. Thus, RH investors acted as a (small) market-stabilizing force. They were also unusually interested in some “experience” stocks (e.g., Cannabis stocks). Nevertheless, the narrative of pure irrational exuberance is misleading. Collectively, RH investors principally held stocks with large persistent past share-volumes and dollar-volumes, making them invest overwhelmingly in large rather than in obscure stocks. A portfolio constructed on the basis of just these two slowly moving variables can mimick the investments of RH traders, plausibly even beyond the sample. (2000 would have been an exceptionally bad year.) The collective RH crowd portfolio did not underperform with respect to standard academic benchmark models.

JEL Classification: D9, G4, G11

Suggested Citation

Welch, Ivo, Retail Raw: Wisdom of the Robinhood Crowd and the COVID Crisis (September 29, 2020). Available at SSRN: or

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