Overthrow Wall Street! From the market periphery to the pricing hub, this group of "whales" is rewriting the rules of the US stock game.

Once on the market's edge, retail investors are now moving towards the center stage. Bobby Morawiec, head of execution services for Europe, the Middle East, and Africa at the Goldman Sachs Group, Inc., stated in a report that market data shows the increasing influence of retail investors, significant enough to profoundly change the direction of the US stock market. He described this group as "both price makers, topic generators, and fund flow drivers." According to Goldman Sachs Group, Inc.'s statistics, retail investors currently account for about 30% of the daily trading volume in US stocks. In May of this year, the trading volume of retail investors exceeded the previous record set during the "MEME stock" frenzy in January 2021 by 10%, and in June, it hit a new all-time high. At the same time, retail trading has also driven activity in the stock derivatives market. Several trading dates have seen total options contract trading volumes surpassing 50 million, doubling the historical peak daily level from three years ago. In the past 18 months, institutional investors have generally remained cautious, often underweight, low leverage, and lacking confidence. These professional investors have been waiting for a pullback that never seems to come, instead finding themselves chasing highs in the midst of the artificial intelligence (AI) boom that has repeatedly pushed the markets to new highs. Retail investors, on the other hand, have been buying on dips, following momentum strategies, leveraging their positions, and consistently succeeding in their trades. The footprint of retail investors now covers various popular trading instruments, from their interest in initial public offerings (such as SpaceX), to single-day call options, regular and leveraged ETFs, perpetual futures contracts, and prediction markets. In recent months, the retail frenzy has swept through markets in the US, China, South Korea, and Taiwan. Scott Rubner of Citadel Securities wrote earlier this week, "Retail remains the most steadfast structural buying force in US stocks. Since July, our retail stock trading platform has not seen a single net selling day." Data shows that July of this year is the second strongest month of net buying by retail investors since January 2020 and the strongest July on record for Citadel Securities. Perhaps even more noteworthy is the growing evidence that this trend is sustainable. The emergence of retail power is not a new phenomenon, as the "MEME stock" era has been over for five years. However, the shift now is that the flow of funds has evolved from a cyclical phenomenon to a structural norm. Whether it be the outbreak of Iran conflicts or a significant decline in chip stocks, retail sentiment has remained virtually unshaken, in fact quite the opposite. A recent observation by JPMorgan's equity strategy and quantitative research team also confirms this point. Despite a complex market environment, retail confidence remains strong. Led by Allen Jha, the team noted that the technology stock crash "hardly dampened retail participation," instead providing them with opportunities to buy on dips. Looking at a longer-term perspective, the scale of retail investors far exceeds what daily and monthly trading data show. According to Goldman Sachs Group, Inc., self-directed brokerage accounts hold about $12 trillion in stock assets, accounting for about 10% of the US corporate stock market. Morawiec of Goldman Sachs Group, Inc. further noted that those considered active traders among retail investors are only a small part of the vast retail investor group in the US. It is the majority of the market, with a direct or indirect holdings of market value reaching $111 trillion, that are the true "whales." Even in Europe, where interest in stocks has traditionally been lower, changes are occurring. More American-style new-age brokerage firms are emerging, providing faster, more convenient, and lower-cost market access. Political changes also suggest growth in stock investments. Germany is replacing its previous pension model with a modernized government-subsidized "retirement investment account." The system is expected to launch in early 2027, is removing strict capital guarantee requirements, allowing up to 100% equity allocation for higher investment returns, and offering exclusive choices for those under 18. In addition, German Chancellor Merkel has stated they will consider adding mandatory pension contributions, injecting at least 30 billion (approximately $34.4 billion) annually into capital market funds to strengthen the sustainability of the pension system. However, the continued rise of retail investors has not yet experienced a major and prolonged market shock. Since 2022, this group has not faced a sustained downturn lasting more than a few months. How they will respond to a market that continues to decline, especially in combination with a weak job market and declining household incomes, remains to be seen. At least for now, the strategy of "holding firm, adding to positions" seems more resolute than ever before. As Morawiec puts it, "In summary, retail investors are becoming an indispensable part of the US stock ecosystem - playing a crucial role in generating momentum, strengthening momentum, buying on dips, or simply in daily trading volume and price formation."