Retail traders have now lost all the money they gained during the pandemic, according to Morgan Stanley

• Retail traders have now lost all the money they gained during the pandemic, according to a Morgan Stanley seen by Bloomberg.
• A brutal Federal Reserve-driven sell-off has whacked the tech and meme stocks beloved by young amateur investors.

Many retail traders made huge gains during the pandemic as they bet big on tech stocks such as chipmaker AMD and EV company Nio.

But they've now lost it all thanks to the brutal Federal Reserve-driven sell-off that has whacked equities in recent months, according to a Morgan Stanley note seen by Bloomberg.

Morgan Stanley's trading team estimated that amateur investors are now exactly where they started in January 2020, Bloomberg reported.

Millions of Americans started actively investing in stock markets during the pandemic as they found themselves stuck at home with few other things to spend their money on.

This army of retail traders was drawn to fast-growing tech companies and so-called meme stocks. Among the most popular shares in 2021 were Apple, AMD, Nio, Tesla and cinema chain AMC.

Tech stocks fared particularly well in 2020 and for the first half of 2021 as governments and central banks pumped money into economies, pushing investors towards the more speculative corners of the market.

But the Federal Reserve's moves to hike interest rates aggressively have brought the easy-money era to an end and contributed to a dramatic fall in tech and meme stocks.

Nio is down around 74% from its June 2021 high; AMD has dropped 45% from its November high; and Tesla has fallen 34% since peaking in the same month. The tech-heavy Nasdaq 100 index has tumbled more than 25% since peaking in December.

Retail traders bought $14 billion of stocks in April, the second-slowest uptick since the back end of 2020, Morgan Stanley said, according to Bloomberg.

Data from the bank showed that amateur investors are increasingly buying pessimistic "put" contracts — which profit from stocks falling — rather than optimistic "calls".