The US stock market is too crazy, Wall Street is hesitant, but retail investors are betting their entire fortunes

As fund managers generally hold a bearish outlook on U.S. stocks, individual investors are flooding into the market, betting on single stocks and high-leverage tools, hoping to reap huge returns from the extreme volatility.

On April 22, Bank of America released a report stating that amid a 1.5% decline in the S&P 500 index last week, clients net sold U.S. stocks for the first time in three weeks, totaling $1.6 billion. The ETF market also saw its first sell-off in five weeks, although there was still a slight net purchase of individual stocks.

Notably, institutional clients and hedge funds continued their previous selling trend, while retail investors net bought for the 19th consecutive week, setting the longest buying record since 2008.

According to media reports, JP Morgan data also indicated that from the time Trump announced the so-called reciprocal tariffs until April 16, individual investors net bought $21 billion worth of stocks and ETFs, in stark contrast to fund managers' generally bearish view on U.S. stocks.

On the day in early April this year when the market plummeted and investors sold off trillions of dollars in stocks, 37-year-old marketing director Dan Oksnevad did not go with the flow. Instead, he bet 90% of his seven-figure portfolio (including retirement funds) entirely on Bitcoin and related stocks. Although Bitcoin fell nearly 6% that day, Oksnevad stated:

This is simply a loud buying opportunity; I am pursuing decades of returns within weeks or months. I truly believe that market volatility is where wealth is created.

Wall Street Funds Cautiously Bearish on U.S. Stocks

The Bank of America report pointed out that amid recent market volatility, Wall Street fund giants seem to be taking a cautious stance on the U.S. stock market, with signs indicating they are actively bearish and selling off their U.S. stock assets.

Bank of America stated that overall, institutional investors have net sold stocks totaling $28.613 billion over the past 12 months, a figure that has reached $37.297 billion over the past 17 years (from January 2008 to present). In the week of April 14, 2025, institutional investors net sold $3.263 billion in stocks, reflecting their concerns about the current market outlook.

Bank of America analysts noted that in terms of specific sectors being sold off, finance, technology, and industrials are at the forefront:

• In the financial sector, the selling behavior of institutional investors is particularly evident. In the week of April 14, 2025, institutional investors net sold $407 million in financial stocks.
• The technology sector also did not escape the selling wave from institutions. In the week of April 14, 2025, institutional investors net sold $59 million in technology stocks
• The industrial sector is also facing selling pressure from institutional investors. In the week of April 14, 2025, institutional investors net sold $87 million in industrial stocks.
• In the healthcare sector, institutional investors net sold $12 million in the week of April 14, 2025; in the communication services sector, they net sold $21 million; and in the utilities sector, they net sold $16 million.

These sell-offs indicate that institutional investors are taking a cautious stance on the overall market outlook and are responding to potential market volatility by reducing their holdings in risk assets.

When Wall Street veterans are confused, newcomers are betting on huge profits

According to media reports, for the Robinhood generation of investors who started trading in 2020, this market turmoil triggered by tariffs is their first taste of a significant market crash.

Some amateur traders say they have been waiting for this moment to buy stocks at what they believe are steeply discounted prices. Content creator and day trader Patrick Wieland stated:

Young people today say, no risk, no Ferrari.

He recently invested thousands of dollars into ProShares UltraPro QQQ. This fund is a three-times leveraged ETF designed to produce three times the daily return of the Nasdaq 100 Index, recording double-digit gains during the historic rebound on April 9, but still down over 20% this month. He said:

I think you have to be aggressive; it's hard to avoid risk when the market is so volatile.

Reports indicate that some investors admit their recent actions are equivalent to gambling. Kiel Elliott, an executive at an entertainment studio in Los Angeles, spent about $40,000 on GameStop call options in early April.

Elliott describes himself as a "fallen gambler" and stated that the market's ups and downs create a perfect environment for trading, with GameStop stock rising 25% this month.

42-year-old Elliott said:

I might be losing years of my life; I'm enjoying this adventure right now. I need to remind myself that I could lose it all tomorrow.

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 your own risk