Maybe the “dumb money” deserves a little more respect.
Retail investors just wrapped up their third straight year of beating the broader market, at least based on the best proxies Wall Street has for tracking individual trading behavior. There’s no perfect scoreboard for retail performance, but the available data all points in the same direction.
Interactive Brokers said individual clients posted an average return of 19.2% in 2025, topping the S&P 500’s total return of 17.9%. Goldman Sachs’ basket of retail favorites did even better, rising 30.5% versus the index’s 16.4% gain.
AI, metals, and risk appetite paid off
Banks tracking retail flows say the outperformance was not random.
JPMorgan noted that retail investors outperformed major indexes thanks to a heavy tech bias, strong positioning in AI trades, and a willingness to lean into precious metals. In single stocks, JPM estimates retail traders were up more than 40% through early December, driven largely by exposure to AI-linked names.
That strategy showed up clearly during moments of stress. When markets sold off after President Trump’s tariff announcement, retail traders stepped in aggressively, buying stocks like Nvidia $NVDA ( ▲ 1.26% ) , Tesla $TSLA ( ▼ 2.59% ) , and Amazon $AMZN ( ▼ 1.87% ) while institutional investors de-risked.
High beta cuts both ways
Still, not all of this success came from perfect timing or superior stock picking.
Many retail favorites share one key trait: high beta. These stocks tend to move more than the market in both directions. When indexes rise, they often rise a lot more. When markets fall, they usually fall harder too.
In 2025, that leverage worked in retail traders’ favor because markets finished higher. If conditions flip, the same positioning could quickly become a headwind. For now, though, the scorecard says retail traders keep winning.