Buying on dips has become a habit! Will retail investors in the U.S. stock market, who have only seen bull markets, face their first bear market?

According to Zhitong Finance APP, tariff turmoil has disrupted Wall Street's investment strategies. However, many retail investors still adhere to the trading principle they have followed throughout their lives: buy on dips.

In Las Vegas, Nevada, 31-year-old Brandon Arnett stated, "I have been buying the S&P 500, Nasdaq, Nvidia (NVDA.US), Broadcom (AVGO.US), and Amazon (AMZN.US)." This young man, who quit his medical job to trade full-time in 2023, described the market sell-off as "short-term volatility that is expected to bring long-term gains." To raise more investment funds, he has even recently cut back on daily expenses.

Arnett is not alone. Despite the turbulent stock market at the beginning of 2025, many retail investors are viewing market fluctuations as a good opportunity to buy, ignoring warnings of an economic recession.

Craig Sutton, a 49-year-old consulting advisor from Florida, has also been looking for idle funds to increase his ETF portfolio. "These fluctuations are indeed frightening in the long run, but stocks now feel more like they are on sale."

This confidence in buying on dips stems from the unique market perception of the younger generation. For investors under 40, their adult experience has only included the longest bull market in history (lasting 11 years) that emerged from the ruins of the 2009 financial crisis, and the shortest bear market in history (only 33 days) triggered by the COVID-19 pandemic.

"Stonks Only Go Up"

Such a rapid rebound has led a generation of investors to view market declines as buying opportunities. Meanwhile, popular cultural stock promoters like Dave Portnoy, during the post-pandemic stock market surge, advocated the slogan "Stonks Only Go Up" (implying that U.S. stocks always rise, with "stonks" being a deliberate misspelling of the word "stocks"), reinforcing this notion.

Peter Atwater, an associate professor of economics at the College of William & Mary and president of the institutional consulting firm Financial Insyghts, stated, "They believe the market operates this way because it has operated this way in their lifetime. History shows us that the more people can infer the future based on the past, the more fragile the system becomes."

After Trump announced plans to disrupt the global trading system by imposing tariffs on most of America's trading partners, the S&P 500 index plummeted on April 3 and 4, marking its worst two trading days since 2020. In subsequent trading, the index fell to the brink of a bear market, then Trump suspended the tariffs—something he insisted he would not do—just 13 hours after they took effect, triggering the largest single-day gain in the S&P 500 index since October 2008, reaching 9.5% The damage caused to companies in the most active trading sectors of brokerage firms like Robinhood and Fidelity is significant. Since Trump announced tariffs, the stock price of Micron Technology (MU.US) has fallen by 19%, while the stock prices of Tesla (TSLA.US), Apple (AAPL.US), and Meta (META.US) have all dropped by more than 9%, and Amazon (AMZN.US) has seen a decline of nearly 8%. As of Monday's close, the market capitalization of the S&P 500 index has evaporated by more than $2.2 trillion.

Although recent history may suggest that these stocks will soon recover to the highs set months ago, it is clear that this time the stock prices may remain depressed for a long time. Investors who bought into the Nasdaq Composite Index at its peak in March 2000, as well as those who bought during some bear market rallies, had to wait over 15 years to return to the highs of the internet bubble era.

Preparing for a rebound

Atwater stated, "If you started investing in your 20s and experienced the rebound after the COVID-19 pandemic, if you are in your 40s and experienced the rebound after the housing mortgage crisis, and if you are in your 60s and experienced the rebound after the internet bubble, you are likely to believe that any downturn is ultimately temporary."

Objectively speaking, except during the major financial crisis, the stock market has risen in every consecutive 10-year cycle since World War II.

"When negative events occur, most investors feel that we will never recover from it," Arnett said, "but every time we encounter such situations, the major stock indices rebound to new historical highs, or even higher."

While this is true, there are signs that the current turmoil may persist. Trump's inconsistent trade policies have led Wall Street economists to raise the probability of a recession in the U.S. and globally. Long-term U.S. Treasury bonds and the dollar have fallen alongside stocks, which is an unusual market pattern, as investors typically seek the safety of U.S. Treasuries and the dollar during stock market turmoil. Instead, it seems that capital is flowing out of the U.S. now.

Atwater noted, "Investors of all ages in the U.S. believe that America is a safe haven for global capital. The idea that this may no longer be the case represents a fundamental shift in the mindset of Americans."

According to data from JP Morgan, as of Monday's close, retail investors have injected $17.7 billion into the stock market since Trump announced tariffs on April 2. However, the bank's global quantitative and derivatives strategist Emma Wu indicated that their buying momentum has weakened earlier this week, with a net difference of about $1.3 billion in the first hour of trading on Tuesday.

In the Greater Chicago area, 41-year-old Thy Vu has been betting on a rebound for stocks like Nvidia and Tempus AI (TEM.US) "This is a crazy market, but it's also a market where you can take advantage and make money quickly," said the sales and market analyst, who trades options "every day" and buys Nvidia to increase his stake in the company by about $55,000.

Wall Street Warns

This unrestrained optimism stands in stark contrast to the warnings from Wall Street giants. A survey by Bank of America shows that fund managers are exhibiting the most pessimistic sentiment seen in 30 years. Strategists led by Michael Hartnett wrote in a report that they are "extremely pessimistic about the macro economy, but not yet extremely pessimistic about the market."

Meanwhile, JP Morgan CEO Jamie Dimon warned that the current environment is "turbulent," and BlackRock CEO Larry Fink stated that the recent market downturn "has impacted the retirement savings of millions of ordinary people." The pressure from the significant stock price fluctuations has deterred some individual investors who recently gained substantial returns in the rising stock market.

Peter Trang, co-founder of Asian packaged food company Ouh - Mami Foods, switched from leveraged ETFs to the underlying company stocks they track after suffering a loss of over 30% at the beginning of the year, which once led to a $120,000 loss in his portfolio.

"I've become more cautious," he said, noting that an acquisition his company is undertaking has provided him some relief from staring at the loss on his screen. "You can buy the dip now, but I think we will see more adjustments in the next 90 days. It won't be a V-shaped rebound, but rather a winding one."

Others are also taking a wait-and-see approach. Senior IT manager Kumar Tenkayala holds shares of Nvidia and Tesla in his 401(k) retirement plan, but he is waiting to invest more until the market stabilizes.

"Everyone can make money when the market is up," said the 52-year-old investor, recounting how colleagues from his first job lost hundreds of thousands of dollars when the internet bubble burst. "I worked with some people who told me to buy AOL or other stocks, and then when the market crashed, they lost most of their net worth. I don't want to be that kind of person."