Washington [US], February 24: For years, individual investors were dismissed by some on Wall Street as "dumb money." That typically referred to those prone to trading on hype, or chasing trends rather than company or industry fundamentals, or responding late to big market moves.
That's no longer the case. An analysis of where individual investors put their money last year shows they outperformed two of the most popular, professionally managed index funds, SPY and QQQ, whose goal is to mirror the performance of the S&P 500 and Nasdaq 100, respectively.
These investors, also known as retail investors, accounted for $5.4 trillion in trading activity in 2025 across stocks and exchange-traded funds, or ETFs, according to Vanda, an independent data and research firm. That's a nearly 47% increase from the previous year and the most going back to at least 2014. "I personally want to dispel the myth of retail being dumb money, because it's not dumb money anymore," said Joe Mazzola, head trading and derivatives strategist at Charles Schwab, at an investor education event held in Anaheim, California, last November that drew around 800 of the financial services company's clients.
Many Americans have long invested in the stock market, although largely hands-off through managed funds in retirement plans, such as a 401(k). But over the last decade, the advent of mobile trading apps, zero-commission trading, stock market-focused communities on social media and online tools for education and research has helped usher in a new era of do-it-yourself trading in stocks, crypto and other investments.
The COVID-19 lockdowns were an inflection point. A new crop of investors, many young newcomers using investing apps like Robinhood, helped drive the "meme stock" frenzy that catapulted the price of GameStop, AMC Entertainment and other stocks.
Meme stocks aside, years of mostly uninterrupted, strong stock market gains provided an attractive backdrop for more people to take up investing. The benchmark S&P 500 has posted an annual loss only three times going back to 2015. By early last year, the number of people moving money from checking accounts to investment accounts reached its highest levels since 2021, according to a report by JPMorgan Chase. Some may have been younger Americans who couldn't afford to buy a house and instead put the money in stocks, the report suggests.
All told, money coming into the market from individual investors jumped about 50% from 2023 to early 2025, according to the report.
"I would say they are considerably more important as a force in markets right now," said Steve Sosnick, chief strategist at Interactive Brokers.
"Markets used to be really dominated by institutional investors, but if you put enough ants together, they can move a very big log." Frank Sabia from Encino, California, started dabbling in investing in 2018. Over the years, he's leveled up his market and trading knowledge by joining private investor chat groups online or attending investing seminars like Schwab's
Source: Qatar Tribune
