Retail Traders Are Back – But Is That a Good Thing?

Retail Traders Are Back – But Is That a Good Thing?

The retail trading frenzy is back, and it's breaking records—again.

Take a look at JP Morgan's Retail Sentiment Indicator—it’s skyrocketing to levels we’ve never seen before. But here’s the burning question: Is this a good or bad thing?

To get some insight, let’s rewind to when this happened last time. Remember January 2022? Right after we broke the previous record, stocks slid for nine months straight.

Coincidence? Probably not.

Retail investors—though enthusiastic—have a reputation for poor market timing. Meanwhile, Wall Street has a habit of dumping overvalued positions right into their laps.

And now? We’re breaking those records again, with the stock market being choppy over the past three months.

So, is Wall Street doing what it does best and unloading its overvalued positions onto retail traders? Only time will tell.

But with sticky inflation and Trump’s tariff policy looming large, don’t be surprised if the coming months get rough for stocks.