Buy the dip! U.S. stock retail investors "iron-willed" increase positions, but losses for the year remain difficult to reverse
Despite Trump's tariff policy causing significant fluctuations in the US stock market, retail investors have shown resilience and continued to increase their positions. According to JPMorgan Chase data, retail investors net bought $4 billion on Wednesday, despite the market declining again on Thursday. Retail investors' portfolios have not yet reached breakeven, with losses intensifying this year. Since April, retail investors have cumulatively invested $11 billion, far exceeding the 12-month average. The buying strategy of young investors was formed during the pandemic and continues to be active in the market
According to Zhitong Finance APP, despite President Trump's tariff offensive causing severe fluctuations in the U.S. stock market, retail investors have shown remarkable resilience, continuously injecting funds into the turbulent market.
Data from JPMorgan Chase quantitative strategist Emma Wu shows that the strong rebound of the S&P 500 index on Wednesday sparked enthusiasm among retail investors, and even as the stock market fell again on Thursday, they still increased their positions against the trend. On that day, the net buying amount by retail investors reached $4 billion, marking the fourth time this year it has surpassed this threshold.
"The market crash did not scare off retail investors," said Wu, a global quantitative and derivatives strategist at the bank. "Even in the face of a sell-off, they are still actively buying."
However, the market reversal has exposed the cost of this blind confidence. The 17% increase on Wednesday nearly erased retail investors' losses for the year, but the latest round of selling has pushed them further away from their breakeven target.
Wu stated, "Considering their continued bottom-fishing during the crash, we estimate that their portfolios are still far from breakeven."
It is noteworthy that, amid escalating trade tensions, retail investors who adhere to a buy-the-dip strategy have indeed outperformed the broader market. The S&P 500 index has fallen 10% this year due to heightened economic concerns.
Overall, since April 2, when Trump imposed comprehensive retaliatory tariffs on trade partners, retail investors have cumulatively invested $11 billion. This figure far exceeds the 12-month average, with a probability of occurrence of only about 1%.
Data from JPMorgan Chase shows that retail investors' enthusiasm for individual stocks remained high on Thursday, with long-popular stocks like Tesla (TSLA.US) and Palantir (PLTR.US) still being top choices.
As the S&P 500 index experiences severe fluctuations, these retail investors, who rose to prominence during the COVID-19 pandemic by exchanging investment advice on social media, continue to bravely navigate the stock market, while large institutional investors have turned to international markets and low-risk assets like U.S. Treasury bonds.
"The investment paradigm for retail investors, especially younger ones, has changed; they have continued the buy-the-dip strategy formed during the pandemic," said Mark Hackett, Chief Market Strategist at Nationwide. "Wednesday's surge—partly driven by institutional short covering—reinforced this investment tendency once again."