A chart displaying Apple’s stock price on a smartphone app.
Jaap Arriens | Nuphoto | Getty Images
Individual investors had an exceptional year in 2025.
Family investors bought the dip at key times this year, delivering strong returns as the market hit all-time highs. Once seen as unsophisticated and easily fooled, a new generation of retail investors is giving a hard time to the professionals who have long dismissed them, according to investors and market data analysts surveyed by CNBC.
“Retail is simply getting smarter and adapting to the market,” said Mark Malek, chief investment officer at Siebert Financial. In other words: these investors are really “growing up.”
Individual traders bought the dip more quickly during market downturns earlier this year, according to JPMorgan quantitative analyst Arun Jain, who called it a “successful year” for this group. An effective strategy: 2025 promises to be the year second best year since at least the early 1990s for dip buying, according to data from Bespoke Investment Group released this month.
Starting in May, JPMorgan said, these investors shifted away from individual stocks and toward exchange-traded funds. The group particularly immersed itself in SPDR Gold Stocks (GLD) fund, with JPMorgan finding that 2025 inflows exceeded the last five years combined. The gold-focused ETF has seen a record rise of more than 65% this year amid a rise in the precious metal to unprecedented heights.
The result: Individual investors’ single-stock portfolios recorded higher profit-to-loss ratios than baskets linked to artificial intelligence and software managed by JPMorgan, according to the bank’s data released earlier this month. Ordinary investors’ ETF holdings had significantly higher profit rates than ordinary investors. SPDR S&P 500 ETF Trust (SPY) And Invesco QQQ Trust (QQQ)the company discovered.
‘TACO’ and buy the dip
A big factor in their strong performance this year dates back to a week in April that kept investors of all sizes on their toes.
Big money ran for the hills while President Donald Trump first revealed his plan to wide and high prices in most foreign countries on April 2, which he nicknamed “Liberation Day”. THE S&P500 briefly slipped into bear market territory institutional investors fear that this policy will increase inflation and weigh on corporate profits.
But individual investors jumped head first in turbulence. They bought a record more than $3 billion in stocks on net on April 3, even as the S&P 500 fell about 5% during the session, according to market research firm VandaTrack. High buying continued the next day despite an average decline of another 6%.
Trump has given most of his heaviest tasks on pause April 9, exactly one week after “Liberation Day”. Small shareholders were at the forefront of the S&P 500’s 9.5% rise this session. The broad index has climbed more than 21% since April 2. It is on track to end 2025 up more than 17% after hitting several new intraday and closing records.
“We often talk about retail as being sort of late to the party,” said Viraj Patel, deputy director of research at Vanda. “But this has been the opposite.”
S&P 500, year to date
At Siebert, Malek said professionals were starting to get nervous as the S&P 500 fell. below 5,000 during the tariff-induced sale. But their retail traders continued to buy until the end, building on their past successes by increasing their exposure amid pullbacks rather than panicking.
Retail investors “have been more right about the market and how to react, certainly, to a lot of the emotional trades of the year,” Malek said. “They were much more precise in their relationships than my colleagues in the institutional world.”
In addition to believing in buying on the dip, these traders also benefited from the belief that the “TACO business” This would happen, according to Zhi Da, a finance professor at the University of Notre Dame who studies the activity of retail traders.
Read more of CNBC’s reporting on retail investors
Known as “Trump Always Chickens Out,” this strategy encourages investors to buy stocks when White House policy decisions cause market downturns, in the hopes that those actions will be reversed. On the other hand, institutional counterparts have been more cautious about discussing Trump’s policies, Da said.
Da acknowledged that there was an element of luck and that 2025 was an “exception” to the rule. Typically, retail investors buy market dips too late and don’t benefit as much on average, he said.
A “more sophisticated” investor
The positive year 2025 for retail follows the investment boom among everyday Americans that began during the pandemic. The next serious market downturn will test whether high participation will last.
In 2024, more than one in three 25-year-olds have transferred significant sums from current to investment accounts since the age of 22, according to JPMorgan data released earlier this year. This represents an increase from just 6% of 25-year-olds in 2015.
JPMorgan found that in 2025, retail flows hit records, up more than 50% from last year and about 14% higher than the meme stock craze of early 2021. Individual investors’ share of total stock trading this year reached heights last seen during that short-selling mania four years ago, according to data in a research paper. work written by professors at Chapman University, Boston College, and the University of Illinois.
The story during The meme stock surge of 2021 – which focused on actions like Stoppage of play And AMC – is that retail traders have made simplistic investment decisions to “stick to the man.” Two years later, the sentiment toward these meme-era stock market players was captured in a film starring Paul Dano, Pete Davidson, Seth Rogen, and Sebastian Stan titled “Stupid money.”
Vanda’s Patel and others said that view is changing. Small investors benefit from expanded access to market research and data — and gain a better reputation on Wall Street in the process, they said. Retail has also established itself as more adept at buying on the cheap, putting them increasingly in the arena with their larger counterparts, Patel said.
“The average retail investor is becoming more and more sophisticated,” Patel said. “This year is kind of a good testament to that.”
A scene from the trailer for the film “Dumb Money” with Paul Dano.
Courtesy: Sony Pictures Entertainment
Certainly, a new class of shares memes including Open Door emerged this year. But Vanda found that far more retail investor dollars were invested in 2025. directed towards names like Nvidia, Tesla And Palantir which has outperformed the market in recent years.
Siebert’s Malek said he has found that ordinary traders are increasingly focused on long-term investing, which can prevent them from panic selling when the market falls. Still, one question remains at the forefront of Malek and other investing leaders’ minds: What will retail traders do when the stock market, after several years of strong gains, finally hits a sustained rough patch?
For now, retail investors are seeing an improvement in their position.
Real estate professional Josh Franklin remembers a decade ago when they were easily written off by big investors. The 28-year-old Tampa resident who invested in stocks like Robin Hood and Palantir over the years and spending dozens of hours a week studying the market, now sees the little guy as a central part of the story.
“Back then, no one really cared about retail. They thought retail was stupid money,” Franklin said. “Now retail is at the top of the rankings.”
