Retail Investors Reshape Wall Street

Retail investors have evolved into a significant and lasting force in equity markets, demonstrating a durable influence five years after the meme stock phenomenon. Their participation in U.S. equities has risen to nearly 20% of daily trading volume, a substantial increase from pre-pandemic levels.

This surge was fueled by factors including government stimulus, the advent of zero-commission trading, and social media coordination. These elements pulled millions of new investors into markets, with participation on high-volume days reaching as high as 40% in equities.

Retail flows saw a significant boost in 2025, jumping nearly 60% from the previous year and surpassing the peak set in 2021. This trend is poised for further expansion as Millennials and Gen Z are projected to inherit approximately $120 trillion over the next 20 years, a wealth transfer that could dramatically increase retail investor capital.

Financial institutions have taken note, with hedge funds scaling back short exposure and investing heavily in tracking retail sentiment. This shift acknowledges the growing power of retail traders who are now viewed as difference-makers capable of moving markets with conviction. They have learned lessons from the tenacity of retail investors who continue to believe in and buy companies, driving market dynamics in new ways.