Retail traders affecting stock prices
There have been numerous of times where I have used the argument to use the interest of retail traders (your average joe) as an indicator to liquidate or not.
If your grandparents or others in your vicinity talk about stocks (who normally don’t) this could be a good indication to sell your stocks as a reversal may be likely.
In the year 1929, Joseph P. Kennedy Sr. sold all of his stock just before the market crash of that year. He got out of the market because he received stock tips from a shoe-shine boy.
In this case, Joseph took it as a warning and immediately acted upon it, saving himself. It is a genuine indicator to consider for anyone who does analysis on stocks.
The University of Berkeley has researched this exact phenomenon. In 2009 they have published their study about the potential of retail traders being able to affect stock prices.
In this case, their conclusion was that over short time horizons (days or weeks) retail traders have a direct influence on the market, pushing or pulling prices.
Over short horizons, retail trades move stock prices.
When we look at longer time horizons - yearly - retail traders do have an influence. However, particularly on small cap stocks. These are companies which have a value below $2 billion dollars. In essence, the smaller the company over shorter horizons, the more influence.
If that research paper isn’t enough, what about Gamestop in January of 2021?