Fearless of U.S. stock market fluctuations, retail investors are buying against the trend! Retail investors are putting real money into practice for "faith-based investing."
Retail investors have been active in the U.S. stock market, continuing to buy despite facing volatility. According to JP Morgan's data, since April, retail investors have invested over $30 billion, particularly demonstrating a "buying on dips" strategy when the S&P 500 declines. Although the U.S. stock market has risen in the long term, short-term volatility makes it difficult to assess investment performance. Experts suggest that long-term investors are better able to remain calm during market downturns
According to the Zhitong Finance APP, retail investors have been actively buying U.S. stocks this year, maintaining their confidence in the market even as professional fund managers seek to hedge. Data from JP Morgan's global quantitative and derivatives strategist Emma Wu shows that since April 2, retail investors have poured over $30 billion into U.S. stocks and ETFs.
"Buying on dips" is a popular strategy among retail investors. Emma Wu pointed out that on Monday, when the S&P 500 fell by 2.4%, retail investors bought over $3 billion worth of stocks, marking the 14th occurrence of such behavior this year and the fifth since April 2.
However, whether this constitutes successful trading is debatable. Although the S&P 500 rebounded on Tuesday and Wednesday, the index is still down about 4% since U.S. President Trump announced the so-called "reciprocal tariffs" on April 2. During this period, U.S. stocks have experienced significant volatility, with the S&P 500 seeing five trading days with declines exceeding 2% and two trading days with gains exceeding 2% within just 14 trading days. This level of volatility makes it difficult to accurately assess the current investment performance of retail investors—everything depends on their timing in entering and exiting the market.
Indeed, the major U.S. stock indices have shown an upward trend in the long term. However, it is equally true that within this upward trajectory, there have been periods—sometimes lasting several years—where investors struggled to recoup their principal. A typical example is the internet bubble period; if someone bought at the peak of the S&P 500 in early 2000, they would only barely break even by mid-2007.
Kevin Jestice, Senior Vice President of Investment Management at Nationwide Financial, stated, "Investors with long-term plans for their portfolios are better able to remain calm and enter the market during current declines. If you are not trying to precisely time the bottom, it is easier to commit funds at any time."
From a broader perspective, JP Morgan's data shows that 60% of retail funds have flowed into individual stocks, with Tesla (TSLA.US) and chip giant Nvidia (NVDA.US) accounting for nearly half; the remaining 40% has gone into ETFs. Large tech companies remain favorites among retail investors, with Tesla particularly benefiting.
On social platforms like Reddit, this "faith-based" investment in large tech stocks is quite common. The so-called "Magnificent Seven" of U.S. stocks—including Tesla, Nvidia, Apple, Microsoft, Amazon, Alphabet, and Meta—boast a large base of loyal retail investors ready to buy heavily when stock prices drop However, market professionals also point out that the current retail buying is not a complete replay of the frenzied emotions seen during the pandemic. Kevin Jestice noted that the regular payroll deduction mechanism for retirement accounts in the United States ensures that stocks will continue to be purchased regardless of market fluctuations. This represents a huge potential pool of funds. Data from the Investment Company Institute shows that as of December 31, 2023, the total assets prepared by Americans for retirement reached $44 trillion, with $1.7 trillion in Individual Retirement Accounts (IRA) and $8.9 trillion in 401(k) retirement plans
