Just how mighty are active retail traders?

JUST TWO years ago the future of investing seemed to involve fewer and fewer people. Retail investors were piling into “passive” index funds, which track a broad basket of stocks for a tiny fee. Active fund managers, whether swaggering hedge-fund gurus or staid mutual-fund bosses, were in retreat as index and quantitative funds swelled. More automation seemed inevitable. A future in which human investors vanished altogether, replaced by slick, powerful machines swapping shares at near-lightspeed seemed just around the corner.That is not quite how things have turned out. A mass of active retail traders have been romping around the American stockmarket for more than a year. They piled into short-dated derivative bets on Tesla, an electric-vehicle maker, and bid up shares in Hertz, a car-rental firm, after it went bankrupt. Early this year came their : a frantic rally in the shares of GameStop, a video-game retailer, which rose by 2,000% in a little over two weeks. So volatile was the share price and so large the flows that the stock-settlement system nearly broke.