Retail investor dip buying hits a record high
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Retail investor activity hit a new record high on a rolling monthly basis, JPMorgan says, as the group continues to buy the dip in the stock market.
Why it matters: Novice traders aren't only dip buying. They're also staying invested, making them increasingly formidable participants that Wall Street can't afford to ignore.
By the numbers: Retail investor dip buying on Tuesday is the third-largest trading day for the group in a year, as traders scooped up stocks while the Dow fell 900 points amid tariff threats and geopolitical concerns.
- Trading volume on the platform Public surged 304% from this time last year as more retail investors turn to new platforms to make their trades.
- Investors on Public used this latest dip to move cash on the sidelines into Big Tech names, Leif Abraham, Public co-CEO and co-founder, tells Axios.
What they're saying: Interactive Brokers, a trading platform that largely serves the retail crowd, saw clients buy the market dip "aggressively" this week, Steve Sosnick, the chief strategist there, tells Axios.
- When the market recovers like it has this week, these investors are "being vindicated, which means they're going to keep doing it until the one day it doesn't keep working."
Threat level: That day is what professional investors are worried about.
- Young people increasingly see investing as a form of income and are turning to AI and influencers for financial advice.
- This crowd hasn't lived through a prolonged market drawdown, meaning they could be quicker to divest if stocks went south and didn't recover as quickly as they've been prone to do in recent years.
- Any drawdown could double in size, given the strength and unknown reaction of retail investors, venture capitalist Paul Kedrosky tells Axios.
Zoom in: Last year, net retail inflows primarily focused into ETFs, or baskets of stocks. This year, those investors are putting in an equal amount into both single stocks and ETFs, according to JPMorgan.
- That is a higher risk trade since you invest in the potential success of one company, instead of buying an ETF with exposure to multiple companies. But the reward for taking such risk is paying off, driving the retail buying.
- As BlackRock CEO Larry Fink pointed out at Davos, if you bought Tesla or Nvidia shares when they first went public, you would be richer than if you bought the shares of his company, the largest asset manager in the world.
Thought bubble: In 2025, sources managing billions of dollars started asking me about what the retail crowd was doing, and how they were getting their market timing so right!
- Retail investors are hungry for any insights they can get from Wall Street, from news stories, social media and our newsletter, of course. 😉
- The circle is becoming a closed loop.
The bottom line: Retail investors are making riskier trades and getting rewarded for it. Wall Street is taking note, and hoping that risk pays off.
- Both parties need it to.
