In 2025, U.S. retail traders face significant losses in the declining stock market, despite actively buying stocks.
Continuing to Buy Despite Losses
Retail traders bought more than $2 billion worth of stocks over 16 days from January to March, with such levels seen only four times in the past two years. JPMorgan reports a model portfolio tracking retail money movements is already down 7% this year, double the S&P 500’s decline. Wall Street veterans fear the market hasn't bottomed out yet as Bitcoin falls and Big Tech stocks decline, making the traditional strategy of buying the dip ineffective.
Trump's Policies and Big Tech Dependence
The S&P 500 recently dropped 10%, spooking investors. Many blame policy uncertainty from Washington and the market's reliance on seven tech giants that make up nearly a third of the index. Trump's trade policies and slowing growth of companies like Apple and Microsoft heavily impact the market. During the recent selloff, all 'Magnificent Seven' saw red, accounting for nearly half of the S&P 500's total loss.
Big Tech's Slowdown Threatens S&P 500
The bond market saw this coming. The long-term growth of the 'Magnificent Seven' previously supported the index, but their slowing growth now threatens its stability. These companies achieved an average of 36% annual returns since 2015 while the rest of the S&P 500 managed only 5%. Investors now question how much longer the market can rely on these companies.
The current market situation highlights the importance of diversification and the need to adapt to rapidly changing economic conditions.
