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It’s a little insulting, but individual investors are sometimes referred to as “dumb money” by financial industry insiders. Mutual fund companies and institutional investors, on the other hand, get the “smart money” moniker.

Of course, retail investors don’t have access to billions of dollars’ worth of investment infrastructure like the pros do, and sometimes (most of the time, in fact) even professionals fail to outperform the market. So, the “dumb” and “smart” labels are not always well-fitting.

Every once in a while we get a large-scale experiment in real life that pits Wall Street conventional wisdom against Main Street investment practicality. During the current stock market dip, retail investors have been increasingly pouring money into new investments, even as the “smart money” pumps the brakes.

Retail investors are apparently seeing recent wild market swings as buying opportunities instead of a cause for concern. As of the second week of March, the S&P 500 was down approximately 13 percent from its record peak. Even so, retail investors purchased about $7.1 billion worth of American securities over just five days in early March, according to data company Vanda Research.

Individual investors are putting enough skin in the game to occasionally affect the stock market as a whole. On February 24, for instance, as the S&P 500 extended its months-long pattern of decline, individual traders funneled a net $1.5 billion into the stock market. The next day, February 25, equities markets surged, with the S&P 500 recovering 2.24 percent. Some analysts place the blame (or the credit, depending on how you look at it) squarely on the shoulders of retail investors.

A number of Wall Street insiders think that buying the dip (or “buying the invasion” as some analysts have dubbed doubling down on the equities market following Russia’s invasion of Ukraine) is a grave mistake. They worry that Putin’s war against Ukraine will lead to even higher inflation which, when combined with central banks increasing interest rates, could lead us into a long-term bear market.

Others, though, are seeing signs of a potential recovery in the equities market, at least over a longer timeframe. The S&P 500’s 50-day moving average is now at approximately 4,465, which is below its current 200-day moving average. Without getting too deeply into the technical indicators, this puts the S&P 500 into a so-called “death cross.” It is not uncommon for the S&P 500 to remain in death cross territory for quite some time — 155 trading days is the average. Yet, despite its scary-sounding name, long-term gains following an initial close in a death cross tend to be quite strong. According to Dow Jones Market Data, the last 53 times the S&P 500 first closed in a death cross, the average gain over a 12-month period has been 50.7 percent.

Retail investors are still very much the little guy in the equities market. Retail investors make up only about 10 percent of daily trading volume. But they have proven that they have an outsize influence, and their appetite for risk is very different compared to their large institutional counterparts.

Individual investors have not been deterred by market volatility or world events. In the unique environment we find ourselves in, they’ve been seeking out bargains rather than ducking for cover. It certainly appears that retail investors will have plenty more chances to hunt for deals in the coming days and weeks.

Of course, no one knows yet whether this strategy will pay off. If it does, the financial industry might have to seriously rethink that “smart money” versus “dumb money” naming convention.

Jonathan Wolf is a civil litigator and author of Your Debt-Free JD (affiliate link). He has taught legal writing, written for a wide variety of publications, and made it both his business and his pleasure to be financially and scientifically literate. Any views he expresses are probably pure gold, but are nonetheless solely his own and should not be attributed to any organization with which he is affiliated. He wouldn’t want to share the credit anyway. He can be reached at

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