According to Amanda Agati, chief investment strategist at PNC Financial, the three main reasons for the speculative frenzy in U.S. stocks are: no trading platform fees, a low interest environment, and the expectation of another stimulus check, according to financial website CNBC. She calls the three together the “perfect storm.
The rise of no-commission trading, like Robinhood and some of the retail trading apps, has certainly fueled the speculative frenzy,” Agati said. That, combined with the low interest environment we’ve been in, makes the cost of risk-taking seem quite reasonable,” Agati says.
According to Agati, the timing of the big short roll in stocks including GameStop and AMC through Reddit and other chat rooms was no coincidence. She says it was the stimulus checks that ultimately took off: “Those checks that were sent out in the first week of January and then the option trading has gone up big in the last two weeks, we think the correlation is very, very high.
Agati, who manages $170 billion in assets, predicts the speculative frenzy will subside when the U.S. economy restarts and the Epidemic slows. She believes the influx of retail investors into the stock market to push up stock prices is a side effect of the Home-based epidemic avoidance.
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