Retail investors continue to increase their positions in U.S. stocks! Tesla's buying strength is the highest in ten years, with retail investors net buying for 13 consecutive trading days

Data shows that despite the turmoil in the U.S. stock market due to trade tensions and growing concerns about an economic slowdown, retail investors have not backed down and are continuously increasing their investments even as losses continue to mount.

Media reports indicate that retail trading data from JP Morgan shows that, for the week ending March 19, individual investors injected over $12 billion into U.S. stocks. According to the bank's global equity derivatives strategist Emma Wu, this buying power is significantly higher than the average level for retail investors over the past 12 months.

Market observers are closely monitoring retail investor movements, as they are often the last group to reduce their positions. Therefore, this recent wave of aggressive buying by "household investors" may indicate that the stock market has not yet hit bottom.

Buying on Dips? It May Not Have Hit Bottom Yet

Wu stated that recent retail investor behavior aligns with the typical characteristics of a "down market year." She pointed out that a similar situation occurred in 2022, when the benchmark stock index fell by 19%, marking the only negative growth year in the past six years. "This reflects their 'buying on dips' mentality," Wu said.

Wu estimates that retail investors have lost about 7% so far this year, while the S&P 500 index had dropped 3.7% as of Thursday's close. Before 11 a.m. New York time on Friday, the index had fallen by as much as 1.1%, exacerbated by forecasts from major U.S. companies including FedEx, Nike Inc., Micron Technology, and Lennar, further increasing market uncertainty regarding tariffs and economic growth prospects.

When the market began to sell off sharply in late February, retail investors were still actively buying, in stark contrast to institutional investors, who were exiting U.S. stocks at an unprecedented pace.

A report from Bank of America on Friday indicated that for the week ending Wednesday, both institutional and private clients of the bank were buying stocks at a rapid pace, with global equity funds recording inflows of about $43.4 billion, the highest so far this year.

The signals from retail investors also highlight the increasingly bearish sentiment on Wall Street. Over the past two weeks, strategists from Goldman Sachs, Citigroup, and HSBC have all downgraded their expectations for U.S. stocks. Morgan Stanley's Michael Wilson stated in a media interview on Thursday that the U.S. stock market will not reach new highs in the first half of this year.

In recent weeks, there have also been signs that retail investor sentiment has weakened. A widely followed survey by the American Association of Individual Investors showed that bullish sentiment has remained below 20% for three consecutive weeks, only slightly rebounding for the week ending March 19.

Tesla Plummets, Retail Fans Eager to Buy

The situation of retail investors entering the market is particularly evident with Tesla. Previously, Tesla's stock price was in free fall, with global sales plummeting, and even the most optimistic analysts on Wall Street began to adopt a more cautious stance. However, fans of Tesla CEO Elon Musk have recently been buying Tesla stock in a frenzy Tesla has always had a group of enthusiastic retail investors who closely follow every word of Musk on his social media platform X. They analyze Tesla's situation in online forums, almost acting as the "hype team" for the stock.

However, even by past standards, the enthusiasm of these retail investors has reached an astonishing level. According to Emma Wu, as of Thursday, retail investors have net bought Tesla shares for 13 consecutive trading days, with a total investment of $8 billion. This is the largest inflow of funds during any buying spree since 2015.

Notably, during this period, Tesla's stock price has fallen by 17%, with a market value evaporating by more than $155 billion.

Since reaching an all-time high in mid-December last year, Tesla's stock price has significantly declined, buoyed at that time by Trump's victory in the U.S. presidential election. However, that optimism quickly faded, and as of now, the stock has dropped more than 50% from its record high on December 17, becoming the second-largest decliner in the S&P 500 index this year. The decline has been so severe that Musk attempted to reassure Tesla employees at an all-hands meeting on Thursday, an action that likely contributed to a rebound in the stock price on Friday.

Nicholas Colas, co-founder of DataTrek Research, stated in an interview,

"Tesla has made many new or mid-stage investors wealthy, with many becoming millionaires as a result,"

"People won't forget that. If they feel a stock has been overly suppressed, they will keep coming back to buy it again and again. These investors don't care about valuations at all. They just believe in the company's future and Elon Musk's abilities."