Robinhood users buy and maintain companies that they “know, understand and believe in for the long haul.” Here are his favorite actions.

It all shows that Robinhood users are buying, and keeping, companies they “know, understand and believe in for the long haul,” the company said in an announcement Friday morning. presentation of the Robinhood Investor Index.

“The index captures how our clients invest based on the 100 most owned Robinhood stocks,” the company said in a statement.

“Unlike most other indices, it is not dollar-weighted, but conviction-weighted. We measure a client’s conviction for each investment by looking at the percentage it makes up of their portfolio,” added Robinhood.

“And to ensure that all clients are equally represented, we average the conviction of each investment across all clients, whether they have $20 million or $20 million in their account,” he added.

“The index does not reflect the positions or performance of any individual investor, but rather is an aggregate view of what our clients are investing in relative terms,” ​​Robinhood said, noting that it will update the index monthly. (The index does not include exchange-traded funds or cryptocurrencies.)

As institutional and retail investors grapple with volatile stock markets and evaluate the possibility of recessionRobinhood hopes that it can be valuable for users to see where others are putting their money.

For all of 2021, the top 100 stocks used by Robinhood users outperformed the Nasdaq Composite overall, and now the two are essentially on par, according to Robinhood data.

The Nasdaq
eraser,
+2.11%

it is down almost 23% so far this year. The Dow Jones Industrial Average
DJIA,
+1.19%

is down almost 12% and the S&P 500
SPX,
+1.53%

It’s down 15% in that period.

“Validation is really important to a segment of our investors, so they will find it very valuable,” said Steve Quirk, director of brokerage at Robinhood.

Put another way: validation is actually knowing that a certain group of people is taking the same approach; for some, it helps to feel that they are not alone.

Of course, there can be difficulties in fully following what others are doing, but Quirk pointed out that the index is just one data point to inform investor decisions.

Other indicators paint a gloomy view of the equity markets. More than half of people voted that share prices will fall in the next six months, according to the latest sopinion poll of the American Association of Individual Investors.

But that could be a ‘buy’ signal, because the organization sees the sentiment survey as “a contrarian indicator” such as a value opportunity.

In total, the most represented sectors in the index include consumer durables, technology and consumer services, Robinhood said.

In early 2021, shares in meme stocks like GameStop soared, fueled by social media support from places like Reddit’s WallStreetBets.

But Robinhood came under intense criticism when it temporarily halted purchase orders from GameStop and other companies during the trading frenzy. It was a necessary step warranty requirementsCEO and co-founder Vlad Tenev later said, also emphasizing that the vast majority of Robinhood users were buy and hold investors instead of traders looking at short-term plays.

Now Robinhood has a new challenge: Tough stock market conditions are taking a toll on users’ portfolios and presenting headwinds for the company itself. Last month, Tenev announced plans to cut staff by 23% due to weakening economic conditions that were hampering business activity and reducing the value of their holdings.

Assets under custody fell 31% from the first quarter to $64.2 billion in the second quarter, Robinhood said in its second-quarter earnings results.

Robin Hood
HOOD,
+4.95%

shares are down almost 40% so far this year.

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GameStop shares rise after smaller-than-expected loss, but company ‘remains a mess,’ says Wedbush