Tariff turmoil has shredded investing play books up and down Wall Street. But far from Manhattan, in the Nevada desert, Brandon Arnett is sticking to the retail trading mantra that’s worked for all his life: Buy the dip.
“I have been buying into the S&P 500, Nasdaq, Nvidia, Broadcom, and Amazon,” the 31-year-old in Las Vegas, said, calling the market selloff “short-term bumpiness hopefully for long-term gains.” Arnett left his job in the medical field in 2023 to trade stocks full time, and in recent weeks has been cutting spending to invest more.
Despite the stock market’s rocky to start 2025, Arnett isn’t alone among retail investors, many of whom are using the gyrations to snap up shares of their favorite companies, rebuffing recession warnings and instead approaching market declines as opportunities to buy equities on the cheap.
Take Craig Sutton, who has been going through his family of four’s budget to see where he can pull cash to add to his portfolio of ETFs.
“I’m looking in the couch cushions for more to invest,” the 49-year-old consultant, said from his home in the Fort Lauderdale, Florida area. “In the long-term, these things are scary but stocks are even more on sale.”
It’s not complicated to figure out why retail traders like Arnett have the confidence to buy into a market at a time that’s among the most volatile in history by some measures. Anyone under 40 only has experienced bull markets in their adult lives, starting with the one that emerged from the rubble of the financial crisis in 2009. Arnett was middle-school aged back then.
That rally ran for 11 years, becoming the longest on record. And while its demise was swift as the Covid pandemic shuttering the global economy, the ensuing bear market was the shortest ever, just 33 days, and provided investors with one of the greatest buying opportunities in history.
Stonks Go Up
Such swift rebounds have conditioned a generation of investors to see downturns as sales. Meanwhile, pop culture stock promoters like Dave Portnoy, who touted the “Stonks Only Go Up” mantra during the post-pandemic surge, have helped amplify that message.
“It is how they believe markets work because in their lifetime that is how markets have worked,” said Peter Atwater, adjunct professor of economics at the College of William & Mary and president of Financial Insyghts, an institutional consultancy. “What we know from history is that the more people can extrapolate the past, the more fragile the system becomes.”
The S&P 500 plunged on April 3 and 4, posting its two worst sessions since 2020, after President Donald Trump announced his intention to destroy the global trading system by slapping tariffs on most of America’s trading partners. It tumbled to the brink of a bear market in the ensuing sessions before Trump paused his levies, something he insisted he wouldn’t do, just 13 hours after they took effect, touching off a 9.5% one-day surge that was the S&P’s biggest since October 2008.
The damage done to companies on the most-active boards at brokerages like Robinhood and Fidelity has been significant. Micron Technology Inc. is down 19% since before Trump’s tariff announcement, Tesla Inc., Apple Inc. and Meta Platforms Inc. have all lost over 9%, and Amazon.com Inc. has dropped almost 8%. More than $2.2 trillion in value has been wiped from the S&P 500 through Monday’s close.
While recent history might suggest those stocks will quickly regain highs set just months ago, share prices can, obviously, stay depressed for long stretches. Investors who bought the Nasdaq Composite Index’s roughly 300% surge in the two years leading to its March 2000 peak, and piled in during some of those bear-market rebounds, had to wait more than 15 years for the index to reclaim the dot-com peak.
Primed For Rebounds
“If you have been investing in your 20s and experienced the Covid bounce, if you’re in your 40s you experienced the housing mortgage bounce, if you’re in your 60s you experienced the dot-com bubble bounce,” said Atwater. “You have been primed to see that any decline is ultimately short lived.”
In fairness, stocks have risen in every rolling 10-year period since World War II, outside of the Great Financial Crisis. That’s conditioned investors who can wait for decades to tap their portfolios, to keep buying.
“In the midst of the negative event, most investors feel we will never come out of it,” Arnett said. “But every single time we had something like this happen, major stock indexes rebounded back to all time highs plus much more.”
While that has been true, there are signs the current tumult might prove lasting. Trump’s incoherent trade policies have led economists across Wall Street to ratchet up their odds for recessions in the US and around the world. Long-term Treasuries and the dollar have both tumbled along with stocks, an unusual market setup as investors tend to seek out the safety of America’s debt and currency during times of equity turmoil. Instead, it seems as if capital is leaving the country.
“American investors of all ages have a perception of America as a safe haven of capital in the world,” Atwater said. “And the idea that that may not be the case is a fundamental shift in how Americans have to think.”
Through Monday’s close, retail investors had pumped $17.7 billion into equities since Trump unveiled the tariffs on April 2, data from JPMorgan Chase & Co. shows. But their buying has been muted to start the week, with a net imbalance of roughly $1.3 billion through the first hour of Tuesday’s session, according to Emma Wu, the bank’s global quantitative and derivatives strategist.
In the greater Chicago area, 41-year-old Thy Vu has been adding to Nvidia and Tempus AI Inc. in a bet that the stocks will rebound so he can help buy animals for a farm his wife has in Illinois.
“It’s been a crazy market, but it’s also a market you can capitalize on and make money really fast,” said the sales and marketing analyst, who has been trading options and buying Nvidia “every single day” to add to his roughly $55,000 stake in the company.
Wall Street Warnings
Such unbridled optimism stands in contrast to warnings from Wall Street heavyweights. Fund managers in a Bank of America Corp. survey expressed a degree of bearishness not seen in three decades. They are “max bearish on macro, not quite max bearish on the market,” strategists led by Michael Hartnett wrote in a note.
Meanwhile, JPMorgan Chief Executive Jamie Dimon is warning of “stormy seas,” and BlackRock Inc. CEO Larry Fink said the recent market downturn “impacts millions of ordinary people’s retirement savings.” The stress of wild swings in share prices has some individual investors who rode recent rallies to massive returns to throw in the towel.
Montreal-based Peter Trang, who co-founded packaged Asian food company Ouh-Mami Foods, swapped his levered-ETFs for the underlying companies they track after losses to start the year topped 30%, giving his portfolio a $120,000 hit at one point.
“I’m more cautious,” he said, taking solace an ongoing acquisition to grow his company has taken him away from staring at screens of red. “You can buy the dip now, but I feel like we’re going to see more corrections within this 90-day period. It won’t be a V shaped, it’ll be a zig-zag.”
Others are also sticking to the sidelines. Kumar Tenkayala, a senior IT manager who lives near Gainesville, Florida, has Nvidia and Tesla in his 401(k), but is waiting for some stability before putting more money to work.
“Everybody can make money when the markets are going up,” the 52-year-old said, before recounting how colleagues in his first job lost hundreds of thousands of dollars when the dot-com bubble burst. “I worked with people who were telling me to buy AOL or this other stock, and then when the market crashed they lost the majority of their net worth. I don’t want to be like that.”
Written by: Bailey Lipschultz — With assistance from Matt Turner @Bloomberg
The post “Retail Investors Who’ve Only Known Bull Markets Are Buying the Dip” first appeared on Bloomberg