Retail Investors Reap Big Gains in 2025 by ‘Buying the Dip’ Amid Market Volatility

Hadisur Rahman, Jadetimes Staff  

H. Rahman is a Jadetimes news reporter covering Business

---

Image Source: Yuki Iwamura/AP

Retail investors in the United States are seeing record profits in 2025 after embracing the age-old strategy of “buying the dip,” helping to fuel a rally that has driven Wall Street equities to new all-time highs despite economic uncertainty and political headwinds.

According to data from VandaTrack, individual investors have poured a record $155 billion into U.S. stocks and exchange-traded funds (ETFs) so far this year, surpassing even the meme-stock frenzy of 2021.

Their commitment to buying during market pullbacks, especially during April’s downturn triggered by President Donald Trump’s tariff blitz, has led to some of the most lucrative retail gains since the early days of the Covid-19 recovery in 2020.

The Nasdaq 100, home to the largest U.S. tech companies, has risen 7.8% year-to-date. But, according to a Bank of America (BoA) model, an investor who only bought the index on down days would have seen a cumulative return of 31% a staggering outperformance.

“Pops and drops will occur … but the dip-buying belief has become the new religion,” said Mike Zigmont, co-head of trading and research at Visdom Investment Group.

This strategy, once seen as speculative, is becoming deeply entrenched among individual investors, many of whom began participating in markets following the 2008 financial crisis and the pandemic-era bull run.

BoA noted that 2025’s dip-buying returns are the best since early 2020 and the second-best in data going back to 1985.

According to Marco Iachini, senior vice president of research at Vanda, retail investors “remain a major force in the market,” and their “dip-buying bias is fully intact,” reinforcing a key behavioral trend that continues to drive momentum in equity markets.

Meanwhile, professional investors have approached this year’s rally with caution. Concerns over the economic impact of Trump’s tax and spending policies, as well as growing national debt and uncertainty around tariffs, have prompted institutional traders to stay on the sidelines.

Strategists at Deutsche Bank noted that institutional demand has cooled since peaking in early 2025, with “few signs of strong bullish sentiment” returning.

Despite the gains, some market veterans are warning that dip-buying carries risks, especially in a climate of elevated volatility and unpredictable policymaking.

“We have a president who likes to surprise people… all of this is a recipe for a higher volatility regime,” said Rob Arnott, chair of Research Affiliates.“Dip-buying works brilliantly until it doesn’t. In a meltdown, it’s a quick path to deep regret.”

The market’s current resilience, bolstered by a retail investor base that has grown more active and risk-tolerant, could be tested if macroeconomic conditions deteriorate or geopolitical tensions escalate.

The buy-the-dip strategy is now a defining feature of 2025’s investment landscape, with retail traders shaping market behavior in ways once reserved for large institutions. Analysts point out that this trend reflects not only access to real-time data and commission-free trading platforms but also a cultural shift in how individuals view investing as both a financial tool and a personal conviction.

Whether this strategy remains effective amid a more volatile economic environment remains to be seen. For now, however, retail investors appear to be driving one of the most powerful stock market rallies of the post-pandemic era.