The so-called retail investors poured $7.3 billion into equities in the week through Wednesday, when they boosted exposure to perennial favorites like Tesla Inc., according to Emma Wu, a global quantitative and derivatives strategist at JPMorgan Chase & Co.
They weren’t riding the usual momentum upward. In fact, the S&P 500 Index slipped over 4% and big tech stocks gave up even more. But, unbowed, they also put billions into leveraged exchanged traded funds that magnify the returns on indexes like the Nasdaq 100 or popular funds like the ARK Innovation ETF (ticker ARKK) run by Cathie Wood.
The push reflects confidence that’s built up since the Global Financial Crisis as US equities — with a few exceptions — tended to rise year after year.
Yet — counter intuitively — that isn’t necessarily a positive sign.
Wall Street professionals have started to grow more cautious on the market, at least temporarily, as they wait to see how Trump’s series of tariff volleys and federal spending cuts affect the economy.
But individual investors tend to be the last to slash their exposure to stocks — and some say the market isn’t primed to bottom out until they have already done so. With money still flowing in, that point seems a ways off: Individuals’ stock holdings exceeded their cash positions by 50% through February, more than double the average low of past non-bear-market S&P 500 corrections since 1988, according to veteran strategist Jim Paulsen.
The buying over the past week was notable in Nvidia Corp. and Tesla, JPMorgan said, with individuals buying more than $4 billion of stock in Elon Musk’s company since last Tuesday even with the shares down nearly 20% since the start of March.
Leveraged ETFs including the ProShares UltraPro QQQ (ticker TQQQ) and Direxion Daily Semiconductors (SOXL) saw more than $1 billion of inflows each last week and steady buying over the past three days, data compiled by Bloomberg show. Wood’s ARK Innovation saw nearly $300 million of buying on Monday as a levered version of the portfolio — Tradr 2X Long Innovation ETF (ticker TARK) — saw its biggest week of inflow since 2022.
All told, ETFs delivering triple the returns of a referenced index or ETF had $2.7 billion in new wagers last week, with the majority focused on beaten-down and high-growth indexes or sectors, according to Bloomberg Intelligence’s Eric Balchunas and Gina Martin Adams.
“Many have become conditioned to buying dips, a strategy that has worked for the past 15 years, so it will likely take much more to get them to sell,” the pair wrote in a note.
