Small Investors' Impact on Wall Street Grows Amid Volatility

Retail investors outperformed major index funds in 2025 as their trading activity surged nearly 47% to $5.4 trillion

Published on Feb. 23, 2026

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A new analysis shows retail investors, often dismissed as 'dumb money,' outperformed two of the most popular, professionally managed index funds in 2025. Retail trading activity reached $5.4 trillion, a nearly 47% increase from the previous year, as a new generation of investors embraced mobile trading apps, zero-commission trading, and online investing communities. The COVID-19 lockdowns were a key inflection point, driving the 'meme stock' frenzy and attracting more people to take up investing amid strong market gains.

Why it matters

The growing influence of retail investors is reshaping Wall Street, challenging the traditional dominance of institutional investors. This shift is driven by technological advancements, social media, and a new generation of do-it-yourself traders who are willing to take on more risk in pursuit of market-beating returns.

The details

Retail investors accounted for $5.4 trillion in trading activity in 2025, up nearly 47% from the previous year. This includes trading in stocks and exchange-traded funds (ETFs). Many Americans have long invested in the stock market through managed funds in retirement plans, but the advent of mobile trading apps, zero-commission trading, and online investing communities has ushered in a new era of DIY investing. The COVID-19 lockdowns were a key inflection point, with a new crop of young investors using apps like Robinhood to drive the 'meme stock' frenzy.

  • In April 2025, retail investors bought the dip after President Donald Trump announced tariffs, purchasing more than $5 billion in stocks over two days.
  • In October 2025, retail investors had one of their biggest buy-the-dip days of the year when the market dropped 2.7% after Trump threatened a 'massive increase on tariffs' on China.
  • Retail investors' trading activity hit an all-time high on a rolling monthly basis in January 2026, coinciding with the S&P 500 climbing to a new record high.

The players

Joe Mazzola

Head trading and derivatives strategist at Charles Schwab.

Steve Sosnick

Chief strategist at Interactive Brokers.

Frank Sabia

A high school registrar from Encino, California, who started dabbling in investing in 2018 and now trades in cryptocurrencies and options.

Noah Goodwin

A junior in high school in the L.A. suburb of Castaic who started options trading on Robinhood Markets early last year using his mother's custodial account.

Andy Hu

A financial analyst in Los Angeles who attends investor education events and balances higher-risk trades with a long-term investment portfolio.

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What they’re saying

“I personally want to dispel the myth of retail being dumb money, because it's not dumb money anymore.”

— Joe Mazzola, Head trading and derivatives strategist at Charles Schwab (Anaheim event)

“Markets used to be really dominated by institutional investors, but if you put enough ants together, they can move a very big log.”

— Steve Sosnick, Chief strategist at Interactive Brokers (AP)

“I just bought the dip.”

— Frank Sabia (Interview)

“I made a $200 profit. My very first trade!”

— Noah Goodwin (Interview)

“The risk to it is that for many of them it's become sort of mechanical.”

— Steve Sosnick, Chief strategist at Interactive Brokers (AP)

What’s next

The judge in the case will decide on Tuesday whether or not to allow Walker Reed Quinn out on bail.

The takeaway

This case highlights growing concerns in the community about repeat offenders released on bail, raising questions about bail reform, public safety on SF streets, and if any special laws to govern autonomous vehicles in residential and commercial areas.