In Wall Street’s old days, you were supposed to worry when a taxi driver mentioned the market. Not many of those are working right now. But Julian Emanuel says other proxies for overflowing risk appetite are out there. For instance, his eye doctor’s 16-year-old.

“Can my kid talk to you?” the BTIG equity and derivatives strategist was asked last weekend by the doctor on behalf of the teenager, who’s out of work due to the lockdown and had been doing well with online stock trades.

“From someone who was in there in ‘99 and ‘00 and could trade rapid fire with the best of them, it really made the hair on the back of my neck stand up,” said Emanuel in a phone interview. “What we’re seeing, I have not seen since 2000.” He’s convinced the conversation wasn’t a one-off: similar ones are happening across the country. He calls it Y2.02K.

Not that it’s all bad, according to Emanuel -- there’s a big difference between today and when the dot-com bubble popped. Back then, a slowing economy, lofty valuations and the frenzy of activity suggested that 2000 was going to end badly. The recent rotation since the bottom into smaller and cyclical plays is more consistent with a potentially longer-lasting bull market cycle, he said. Emanuel isn’t changing his 2020 target for the S&P 500, which he sees ending the year at 3,000.

“Long-term, this stepped-up participation by retail is a positive,” said Emanuel. “There’s a core of people participating in the markets either more frequently or for the first time that are going to end up being more dedicated investors, they will end up being a long-term source of equity demand.”

For Emanuel, who was a proprietary trader in the late 1990s at Spear, Leeds & Kellogg, the encounter is a sign of the times. A chance run-in with finance legend Charles Schwab spurred a bold call by the BTIG strategist late last year: a potential surge in stocks driven, in part, by the fee war that’s swept the asset management industry.

That proved prescient, with the S&P 500 gaining over the past two months despite a growing list of overhanging concerns -- including, still, the coronavirus outbreak that shut down economies worldwide for months.

Though tiny investors aren’t the only source of demand, they’ve been on an epic buying spree, evident in the record sign-ups at giant retail brokerages like TD Ameritrade Holding Corp. and Charles Schwab Corp. Many opened accounts at the depths of the crash and bought blue-chip stocks at steep discounts, as well as shares of so-called recovery firms including airlines, hotels and travel sites.

Shawn Cruz, senior manager of trader strategy at TD Ameritrade, considers those reasonable investments for people with a long-term outlook. “What the thinking was is, ‘I don’t think Microsoft is going to go bankrupt, I don’t think Amazon is going to go bankrupt, but I know 5, 10 years from now, I’ll look back and maybe say I had an opportunity to buy some of these great names at very low prices.”

On the other hand, there’s evidence of retail involvement in insolvency stocks like Hertz Global Holdings Inc. and Whiting Petroleum Corp. To Emanuel, that’s worrying -- an unwinding of retail participation in the near-term could be a catalyst for a downturn.

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