By Tim Courtney, Chief Investment Officer
Over the last several decades, we’ve seen a steady expansion of access in financial markets.1 Investment vehicles and strategies that were once only available to the most qualified investors are now open to a much wider audience. What used to require millions in assets or limited partnership status can now be owned through structures like interval funds and tender funds.2 These products have lowered accreditation thresholds and potentially better liquidity terms than traditional structures and solutions.
Much of this change stems from technological advancements and market maturity. As private markets have developed, and as regulation has adapted, investment firms have found efficient ways to roll out investment structures. That’s allowed more investors to access opportunities that, until recently, were out of reach. It’s difficult to argue that an individual's current financial resources, which may be modest, should dictate the level of sophistication and/or risk at which they are permitted to operate. For better or worse, investing is more open now — and that’s changed market behavior.
We’ve experienced very shallow and short-lived corrections in recent years.3 Normally, a correction serves a purpose; it flushes out speculation and helps reset prices at sustainable levels. But lately, corrections have been few and short lived. The question is why. Is it because the economy is strong and companies are performing well? Or is it because retail participation and speculative demand are keeping markets from correcting the way they naturally should?
We’ve seen increased activity from retail investors across stocks, bonds, options and private assets. The options market, in particular, has become a way for investors to make leveraged bets.4 With lower costs and easier access, especially since the rise of Robinhood5 and the move to zero-commission trading,6 it’s never been easier for retail investors to trade. And that activity appears to be concentrated in some of the most popular names, especially AI stocks.7
Periods of heightened activity often bring a wide mix of market behaviors, such as the one (AI concentration) we are going though now8. Maintaining discipline becomes even more critical for long-term investors and means staying focused on fundamentals rather than momentum. It’s about keeping a clear perspective when markets move quickly and not letting emotion, whether optimism or fear, dictate decisions.
The democratization of finance has opened doors for more people to invest, which is a positive development overall. But it also means markets can move faster and sentiment can shift more quickly. Remaining patient and steady in strategy helps investors stay aligned with their long-term objectives, even when markets feel noisy and crowded with short-term activity. If you have any questions about this, don’t hesitate to speak with your Exencial advisor.
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