SACRAMENTO, Calif.–For millions of credit union members the latest stimulus checks will be a lifeline that helps pay for rent, food and child-related expenses. But for many others the new funds are “extra” money to be put toward other less-than-necessary things, such as investing in the stock market.
That’s what the New York Times has found in interviewing Americans over how they will use the $1,4000 checks they have received. In New York, Abraham Sanchez, for example, a 28-year-old trumpet player in Sacramento, moved all but $200 of his stimulus check into his Robinhood online trading account, and then used most of it to buy 80 shares of AMC Entertainment, New York Times reported
“The speculative appetite of small investors like Mr. Sanchez may seem at odds with an economy still reeling from a pandemic that has killed more than half a million Americans, decimated jobs and snuffed out businesses and livelihoods,” the Times reported. “But one of the biggest tools deployed by the U.S. government to cushion the economic blow — stimulus payments — is also driving a huge surge in investing by small traders.”
As CUToday.info reported here,a new survey by Deutsche Bank has found half of respondents between 25 and 34 years old plan to spend 50% of their stimulus payments on stocks.
More ‘Mania’
“That could lead to a bit more mania, speculation in the market,” Patrick Fruzzetti, managing director and partner at Hightower Advisors, an investment firm, told the New York Times.
The Times’ analysis further noted the willingness of millions of Americans to use emergency federal assistance as play money for speculation speaks to the unique nature of the current economic downturn and the government response to it.
While about nine-million jobs have been lost, most of that has come in certain industries, such as travel and restaurants. Many others have not been affected and have even seen expenses decrease as they work from home.
That’s the case with Victoria Brown, a 25-year-old in Wilmington, Del., with a secure job in government, the Times reported. For Brown, the $1,400 stimulus check is more of an opportunity than a lifeline and she has already moved the money into her Robinhood account and plans to use some of it to buy the stock of Zomedica, a pet health company she owns 1,000 shares of.