Editor's note: Folks are speculating wildly...

With several rounds of COVID-19 stimulus checks burning holes in the pockets of everyday Americans, and with little else to do this past year, people went looking for places to gamble... and they found the stock market.

Of course, these days, the world is starting to open up again. But this band of amateur traders hasn't left...

According to True Wealth editor Steve Sjuggerud, the newcomers have pushed the market into a full-blown euphoria. And he says that positive sentiment is set to propel the "Melt Up" – the last "blow-off top" of this long-running bull market – to its final peak.

In today's Masters Series – updated from the October 19, 2020 Digest as part of a brand-new True Wealth Systems special report – Steve discusses how this mania got started... reveals how the professionals are viewing the markets... and details what it all means for investors today...

Amateur Traders Are Flooding Into the Market

By Steve Sjuggerud, editor, True Wealth

"Stocks only go up," outspoken day trader Dave Portnoy says – often – on Twitter.

On up days, Portnoy is the best there is. At least, that's what he tells anyone who will listen...

"There's nobody who can argue that Warren Buffett is better at the stock market than I am right now," he said on Twitter last summer. "I'm better than he is. It's a fact. You're just gonna have to deal with it."

Portnoy built a huge following through his Barstool Sports business, which is now worth nearly $500 million. And recently, he has become the poster child for the so-called "Robinhood traders" that have flooded the market since COVID-19 began.

When the virus hit and professional sports shut down for months, sports bettors still wanted their fix. So they headed for the stock market.

Betting on stocks has nearly all of the components of sports betting built into it – there's risk, skill, luck, and drama. People get to pick their favorites. And they get to spin stories to explain why their picks are the best.

You can change nearly everything about the who, what, where, when, and why. You can swap team names for stock names... and folks will find a way to roll the dice.

People just like to gamble.

You and I might not see the stock market as gambling. But these folks do. And they're piling in as the market melts up – to a degree that I haven't seen since 1999.

This is the COVID-19 twist no one could have seen coming. But when folks were forced to stay at home, bored to tears, it sparked something in the American public.

The stock market became a form of entertainment. And the stimulus checks from the government created a slush fund of sorts for those who hadn't lost their jobs.

Again, the majority of these new traders ended up on Robinhood... the brokerage that helped usher in a new era of zero-fee trading.

This, as I'm sure you know, is a relatively new innovation. And boy oh boy, has it made it easier to get into the market.

In the past, trading fees could easily eat up a small investing account. Now, even major brokerages have slashed their fees since companies like Robinhood entered the scene. And that means the "dumb money" can gamble with smaller amounts without feeling like the house is taking too big a cut.

Only have $20 to invest? No problem. The trade is free.

Oh wait... That stock is $100 a share? Not to worry – Robinhood will sell you a fractional share you can afford.

New investors love this. It's no wonder Robinhood's investor base continues to grow and grow...

The company has recently been adding between 150,000 and 350,000 new accounts per day. And it saw 600,000 app downloads in one day when the "GameStop bubble" was at its height this winter.

It's not just Robinhood, either. Charles Schwab, TD Ameritrade, and Fidelity are seeing anywhere from 50,000 to 150,000 new downloads on their apps daily.

Simply put, new traders see the gains racking up in the markets, and they want in. That's creating a flood of amateur traders.

Individuals opened more than 10 million new brokerage accounts last year. That was a new record. And these folks aren't buying indexes. They're wildly speculating.

For example, more than half a trillion dollars' worth of stock options traded on a single day in January. That's the highest single day on record.

If you're new to the markets, you typically trade options for one reason and one reason only... to make a directional bet with leverage. You see a one-way train, and you want in on it. And that's exactly what's been happening.

The same is true for another highly speculative area of the markets... penny stocks.

These are shares of very small and often misunderstood companies. The allure is that they can go up a lot in a short period of time. But because of their size, they're also ripe for manipulation.

Their potential for big gains is attracting investors today, though. We saw an incredible 1.9 trillion transactions in over-the-counter markets – where many penny stocks trade – in February. That's a 2,000% increase versus the previous year.

Of course, the biggest and craziest speculation we've seen in 2021 was in shares of GameStop (GME)...

The company became the poster child for a retail-driven boom when it soared as much as 2,000% earlier this year.

I'm sure you know the story... Reddit traders piled into the shares, causing a short squeeze that catapulted the stock higher. As shares soared, more and more retail investors jumped into the market for the first time to buy in.

An astounding 28% of all Americans bought GameStop or other viral stocks in January, according to a Yahoo Finance-Harris poll. The median investment, according to the poll, was just $150. The largest group of buyers was men aged 18 to 44. And 43% of these folks said they had just signed up to get a brokerage account in the last month.

That's hard to fathom. But it's the reality we're living in right now.

A new band of traders is here. And they're here to speculate. The pros are in the same boat, too...

"The only reason to be bearish is... there is no reason to be bearish."

That was the headline of the Bank of America Merrill Lynch Global Fund Manager Survey in February.

The monthly survey asks roughly 200 investment pros what they see in the market. And according to them, there's no good reason not to bet on stocks.

They haven't changed their tune since February, either. The most recent Fund Manager Survey is out. And these folks are just as bullish today as they were back then.

As one example, cash holdings for these fund managers are near the lowest we've seen in the past decade.

For professional investors, holding cash is a form of safety when prices are falling. When they think the market is headed higher, holding cash only hurts them.

Today, they're holding incredibly low amounts of cash. In fact, cash levels have only been lower than this three other times... earlier this year, at the depths of the COVID-19 bust, and in early 2013. So these folks are betting on more gains in stocks.

Similarly, a full 62% of these folks are overweight stocks right now. That's the second-highest reading since the data began in 2002.

The takeaway from all of this is simple... Professional investors have entered a state of euphoria right now.

This all paints a clear picture for the markets. Whether it's professional investors or individuals, everyone is bullish.

It's hard not to be in today's market. Just about everything is going up. Making money seems easy. So why not jump in and take advantage of it?

That euphoric and reckless mentality is what will propel the Melt Up to its final peak. And it tells me that the Melt Down is coming sooner than you might think.

Good investing,

Steve

Editor's note: Pent-up euphoria is pushing the market higher – and Steve says it's only a matter of time before the "Melt Down" arrives. But first, he believes something else will happen...

Steve says we're about to see an extraordinary shift in the markets as the economy reopens. In short, what he's predicting for the next six months could decide what happens to your wealth for the next decade... That's why it's critical you prepare for it now.

Steve is hosting a special event on Thursday, April 29 at 8 p.m. Eastern time to share the details of his latest prediction – including exactly what he believes you should do to protect your money... and how to position yourself to potentially make huge gains in the next few months. Best of all, this event is absolutely free. Click here to reserve your spot.