Dip-buying, ‘TACO’ trade power strong year

Retail investors have had a strong year in 2025.

Mom-and-pop investors bought the dip at key points this year, providing strong returns as the market climbed to all-time highs. A new breed of retail investor is giving the professionals who have long dismissed them a run for their money, according to investors and market data analysts interviewed by CNBC.

“Retail is just getting smarter, and they’re getting hardened to the market,” said Mark Malek, investing chief at Siebert Financial. In other words: These investors “really are growing up.”

Individual traders bought the dip at a faster clip during market drawdowns early in the year, according to JPMorgan quant analyst Arun Jain, who called it a “successful year” for this group.

From May onward, JPMorgan said, these investors shifted their focus from single stocks to exchange-traded funds. The group particularly dove into the SPDR Gold Shares (GLD) fund, with JPMorgan finding 2025 inflows topped the last five years combined.

The result: retail investors’ single-stock portfolios recorded stronger profit-to-loss ratios than baskets tied to artificial intelligence and software run by JPMorgan, according to data from the bank released earlier this month.

A significant driver of their strong performance this year goes back to a week in April that had investors of all sizes on the edge of their seats.

Big money ran for the hills as President Donald Trump first unveiled his plan for broad and steep tariffs on most foreign countries on April 2. The S&P 500 briefly slipped into bear market territory as institutional investors worried the policy would drive up inflation and weigh on corporate earnings.

But retail investors jumped head first into the turbulence. They bought a record of more than $3 billion in equities on net on April 3 — even as the S&P 500 fell around 5% in the session. Elevated buying continued the following day despite the benchmark average dropping another 6%.

Trump put most of his steepest duties on pause April 9, exactly one week after the announcement. Small-scale stockholders were on the ground floor of the S&P 500’s surge that session.

At Siebert, Malek said the professionals were starting to get nervous as the S&P 500 fell below 5,000 during the tariff-induced sell-off. But their retail traders continued buying all the way down, drawing on their past successes in increasing exposure amid pullbacks as opposed to panicking.

Retail investors “have been more right about the market and how to react to, certainly, a lot of the emotionally driven trades of the year,” Malek said.

Retail’s positive 2025 comes years into the investing boom among everyday Americans that began during the pandemic. The next serious downturn in the market will test whether the elevated participation will last.

More than one out of every three 25-year-olds in 2024 moved significant sums from checking to investing accounts since they turned 22, according to JPMorgan data released earlier this year. That’s up from just 6% of 25-year-olds in 2015.