Retail investors favor VOO over SPY during dips
The guest observed that sophisticated retail investors are increasingly using Vanguard's S&P 500 ETF (VOO) as their primary vehicle for buying market dips, rather than trading-oriented instruments like SPY.
The argument
While SPY remains the dominant vehicle for options trading, the guest noted that Interactive Brokers saw a significant influx of customer money into VOO during the market drawdown. He attributed this to long-term investors seeking the lowest possible fee structure to park capital rather than actively trade.
The thesis, stress-tested
✓ What validates it
- ✓Continued outperformance of VOO net inflows relative to SPY during market corrections
- ✓Stabilization of the S&P 500 index following retail accumulation phases
▸ Risks discussed
- ▸Lower liquidity in VOO options compared to SPY makes it less suitable for tactical hedging
- ▸Retail dip-buying can dry up if a drawdown extends into a prolonged bear market
Hear it yourself
"But the but the most bought stock last over the last week was VOO, well, it's an ETF. And to me, that's very critical because VOO is spy for investors. Spy was the most active options in our firm by far were spy. You know, VOO It's the Vanguard five hundred."
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