Retail Investors Pour $67bn into US Stocks as Big Players Pull Back

While institutions sell off, individuals are doubling down on Wall Street dip

Retail investors in the US have pumped an astonishing $67 billion into stocks so far in 2025, even as professional fund managers scale back exposure amid rising market uncertainty. It’s a bold show of confidence from individual traders who continue to ‘buy the dip’, despite geopolitical risk and shaky economic signals.

Individual Investors Stay Bullish Amid Market Wobbles

According to data from VandaTrack, individual investors have invested nearly $70 billion into US equities and ETFs this year, only slightly below the $71 billion they poured in during the final quarter of 2024.

The surge comes as Wall Street grapples with volatility triggered by President Trump’s unpredictable tariff policies and the rise of Chinese AI giant DeepSeek, which has added a layer of uncertainty to the tech-heavy market.

Yet retail investors remain undeterred.

“Dip-buying has worked well for years — people are now conditioned to do it,” said Steve Sosnick, Chief Market Strategist at Interactive Brokers.

A Reddit user from the popular WallStreetBets forum summed up the sentiment:

“Respect the dip, be the dip, BUY THE DIP!”

Tech Stocks Hit, But Optimism Remains

The S&P 500 is down 2% year-to-date, with the tech sector falling 8%, reversing the strong performance seen in 2023 and 2024. Yet many amateur traders are doubling down, buying up big-name tech stocks at lower prices.

Recent buying activity includes:

• $3.2bn invested in Tesla shares
• $1.9bn into Nvidia

Retail investors are also piling into leveraged ETFs that magnify the movements of these tech stocks — a risky move, but one they believe will pay off if the market rebounds.

“Retail investors often stick to household names and ride the momentum,” said Dhruv Aggarwal, law professor and co-author on a study of the meme stock era.

Institutions Retreat While Individuals Rush In

While individuals continue to buy, institutional investors are heading for the exits. Bank of America reports the largest-ever cut to US equity holdings by major investment firms in March.

Despite the S&P 500 falling on 25 trading days this year, retail investors have sold stocks on just seven of those days, according to Goldman Sachs.

“Some investors are more worried about missing out on a bounce than losing money in a drop,” said independent strategist Jim Paulsen.

But not everyone sees this as a good sign. Analysts warn that surging retail enthusiasm can be a red flag — reminiscent of the lead-up to the dot-com crash in 1999.

“When everyday people start asking what stocks to buy, that’s often when the trouble starts,” warned Aleksander Peterc of Bernstein.

Conclusion: Confidence or Complacency?

Retail investors are betting big on a rebound, using strategies that have worked well in recent years. But as professional investors turn cautious and risks pile up, the question is whether retail traders are ahead of the curve — or blindly charging into a downturn.

For seasoned investors and newcomers alike, now may be the time to reassess risk, focus on long-term fundamentals, and avoid overexposure to high-volatility trades.

Source: (FT.com)