Retail investors achieve epic victory! Aggressive "buy the dip" strategy drives the stock market to new highs repeatedly
American retail investors have welcomed their most profitable year since the pandemic, with an aggressive "buying the dip" strategy driving the stock market to new highs. In 2025, individual investors injected a record $155 billion into U.S. stocks and ETFs. Despite market volatility, retail investors' patience paid off, with returns reaching 31%. Bank of America analysis shows that this strategy's returns are the strongest since 2020, pushing U.S. stocks to historical highs. Professional investors, on the other hand, appear more cautious, with Deutsche Bank noting a continued decline in institutional demand
The Zhitong Finance APP noted that American retail investors are experiencing their most profitable year since the early pandemic, driven by an aggressive "buying the dip" strategy that has propelled the stock market to new highs.
According to VandaTrack data, individual investors have injected a record $155 billion into U.S. stocks and ETFs so far in 2025, surpassing the investment enthusiasm seen during the meme stock frenzy of 2021.
Even in April, when President Trump significantly raised tariffs on major trading partners, causing the stock market to decline, retail investors continued to buy the dip. This patience has paid off—while the Nasdaq 100 index has risen 7.8% this year, Bank of America analysis shows that if one had consistently bought after each market dip, the return during the same period could reach 31%.
Since the 2008 financial crisis, this "buying the dip" strategy has become deeply ingrained, as corrections in the U.S. market are often fleeting.
Bank of America's theoretical model indicates that this year's strategy yield is the strongest since 2020, and if traced back to 1985, it ranks as the second-best in history.
The latest surge has pushed U.S. stocks to historic highs, despite concerns over a weakening dollar and falling bond prices. Bank of America strategist Vittoria Volta pointed out that the intensity of buying the dip this year is comparable to the tech boom of the late 1990s.
Meanwhile, professional investors appear more cautious. Deutsche Bank stated that institutional demand has continued to wane since peaking earlier this year, with investors remaining vigilant about Trump's tax and spending policies and their potential impact on the economy and bond markets.
Rob Arnott, chairman of Research Affiliates, warned that in an environment of increased volatility, this buying the dip strategy could backfire
