In the wave of declines in the US stock market, retail investors frantically bought the dip with nearly $70 billion, while institutional giants fled

In the midst of the decline in the U.S. stock market, although professional investment managers are significantly reducing their market exposure, retail investors remain firmly bullish on U.S. stocks.

According to data provider VandaTrack, in 2025, retail investors' net inflow into U.S. stocks and ETFs has reached $67 billion, slightly below the $71 billion in the fourth quarter of 2024.

Steve Sosnick, chief market strategist at Interactive Brokers, a platform widely used by individual investors, stated:

“For four out of the last five years, buying the dip has essentially been a foolproof strategy, and a practice that has proven effective over the long term tends to create a habit of sticking with it.”

The Reddit discussion board wallstreetbets is a forum popular among amateur investors engaging in speculation, where one user expressed a similar sentiment:

"Respect the dip, become the dip, buy the dip!"

Large Investors Are Reducing Positions, While Retail Investors Go Against the Trend

This year, the S&P 500 index on Wall Street has fallen by 2%, with the technology sector plummeting by 8%. This decline sharply contrasts with 2023 and 2024, when the S&P 500 index recorded significant gains driven by a rebound in large tech stocks—traders who bought during market downturns profited handsomely.

A similar situation has emerged recently, as the S&P 500 index has recovered a substantial portion of its losses for the year, rising 1.8% in just one day on Monday. The market hopes that Trump will at least partially retract his threat to impose tariffs on April 2.

"Investors seem to be more concerned about missing the opportunity to buy the dip than about further market declines," said independent market strategist Jim Paulsen.

Goldman Sachs data shows that despite the S&P 500 index experiencing 25 down days this year, retail investors have only net sold U.S. stocks on seven trading days. In contrast, large investors tracked by Bank of America made "the largest reduction ever" in their U.S. stock allocations in March.

Retail Investors Continue to Bet on Tech Stocks, While Institutional Investors Remain Cautious

Retail investors continue to buy stocks that performed best over the past two years but have been hit hard in 2025.

According to data from JPMorgan, retail traders bought $3.2 billion worth of Tesla stock and $1.9 billion worth of Nvidia stock just last week.

Demand for double-leveraged ETFs that track and amplify the price movements of Tesla and Nvidia is also strong. Sosnick noted that retail investors seem to have an insatiable appetite for such products, as buying the dip has proven to be a profitable strategy recently.

Dhruv Aggarwal, an assistant professor at Northwestern Pritzker School of Law, stated:

"Retail investors tend to choose well-known stocks." However, some institutional investors and Wall Street analysts believe that the surge in retail demand is actually a counterintuitive reason to be cautious.

Bernstein analyst Aleksander Peterc stated:

"Back in 1999, when my housekeeper started asking which stocks she should invest in, that was exactly when things began to collapse."

Risk warning and disclaimer

The market has risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investing based on this is at one's own risk