TL;DR

Retail investors, high on past wins and online hype, poured billions into a shaky market while pros cashed out. History doesn’t repeat, but it often rhymes—and this sounds a lot like past crashes.

Story

John, a retired teacher, saw his portfolio shrink by 20% in weeks. He’d been religiously ‘buying the dip,’ a strategy touted on social media. It worked great…until it didn’t. John’s story mirrors countless retail investors swept up in 2025’s market frenzy, echoing manias from tulips to tech stocks.

What happened? While institutional investors fled, spooked by political turmoil and AI disruption, retail traders poured nearly $70 billion into US equities. Blinded by past wins and fueled by online hype, they ignored ominous signs. Like moths to a flame, they were drawn to the promise of quick riches, treating market fluctuations like a video game.

The mechanics are simple: FOMO (fear of missing out). ‣ FOMO: The anxiety of missing a profitable opportunity, driving impulsive decisions. When markets dip, ‘buy-the-dip’ gurus preach opportunity. This works in bull markets, creating a self-fulfilling prophecy. But when fundamentals crack, the house of cards collapses.

This isn’t new. Recall 2008’s subprime mortgage crisis or Enron’s accounting fraud. ‣ Subprime Mortgage Crisis: Loans given to high-risk borrowers, leading to a market crash. ‣ Enron: An energy company that hid massive debt through accounting tricks, eventually collapsing. Blind faith in rising markets masked underlying rot. Today’s ‘dip buyers’ face similar risks, amplified by social media echo chambers.

John’s retirement dreams are on hold. He learned a harsh lesson: Past performance is no guarantee of future returns. The market doesn’t care about your feelings, your memes, or your ‘diamond hands.’ ‣ Diamond Hands: A term for investors who hold onto assets even when their value drops significantly. It’s a cold, calculating machine, and right now, the algorithms are flashing red.

Advice

Don’t blindly follow online hype. Understand market fundamentals. Have an exit strategy. And remember: ‘Diamond hands’ often end up holding bags of coal.

Source

https://www.reddit.com/r/stocks/comments/1jjmb9k/retail_traders_plough_67bn_into_us_stocks_while/