Retail investors in the United States have seen some of their most substantial gains in years by adhering to a time-tested strategy: buying the dip. According to data from VandaTrack, individual traders have invested a record-breaking $155 billion into U.S. stocks and exchange-traded funds (ETFs) in 2025, surpassing even the 2021 “meme stock” boom.
This influx of retail investment has played a key role in propelling Wall Street equities to new all-time highs, despite periods of volatility triggered by major policy shifts, including President Donald Trump’s new wave of tariffs on U.S. trading partners. These tariffs caused markets to stumble in April, but retail investors continued buying during the downturn, confident in a rebound.
Their approach appears to have paid off. While the Nasdaq 100 index — which tracks large-cap U.S. technology companies — has gained 7.8% so far this year, Bank of America (BoA) reports that an investor who bought the index only after it had fallen the previous day would have achieved a cumulative return of 31%. This figure marks the second-best performance of BoA’s dip-buying model since 1985 and the strongest since early 2020, at the start of the COVID-19 recovery.
Mike Zigmont, co-head of trading and research at Visdom Investment Group, commented on the trend: “Pops and drops will occur, but the dip-buying belief has become the new religion.”
The strategy has become deeply ingrained in retail investor behavior, shaped over the last 15 years of mostly upward-trending U.S. markets following the 2008–09 financial crisis. During this time, most market downturns were brief and followed by swift recoveries — reinforcing the conviction that dips present lucrative buying opportunities.
Vanda’s Senior Vice-President of Research, Marco Iachini, affirmed this momentum, noting that “retail investors remain a major force in the market” and that their “dip-buying bias is fully intact.”
The market’s current rebound — despite downward pressure on the U.S. dollar and Treasury markets — has been so strong that some analysts are drawing comparisons to the final surge of the late 1990s tech bubble. According to BoA equity analyst Vittoria Volta, the 2025 rally has been driven by “a buy-the-dip dynamic that by some metrics has been even stronger than that seen in the latter stages of the 90s tech bubble.”
However, not all market participants are convinced. Many professional investors remain cautious, wary of the broader implications of Trump’s recently passed tax and spending legislation, which could significantly increase the national debt. Additionally, fears persist over the long-term economic impact of Trump’s aggressive tariff policies.
Deutsche Bank strategists noted earlier this week that institutional investors have shown limited enthusiasm since early 2025, with little evidence of strong bullish sentiment or heightened risk appetite.
Some analysts warn that while dip-buying has been effective recently, it carries considerable risk — particularly in a highly volatile market environment. Rob Arnott, chair of asset management firm Research Affiliates, cautioned that the current political landscape under President Trump adds to market uncertainty.
“We have a president who likes to surprise people, to keep them off balance, to confuse his adversaries. All of this creates a recipe for higher volatility,” Arnott said. “And higher volatility can make buying low and selling high more profitable — but it also increases the risk.”
“Dip-buying works brilliantly — until it doesn’t,” he added. “When you have a meltdown, it’s a quick path to deep regret.”
As U.S. stocks continue to push into record territory, the question remains: can the dip-buying strategy continue to outperform in a political and economic climate that grows more unpredictable by the day?
