Retail Investors Are Outperforming the S&P 500, but at What Cost?
October 10, 2025, at 9:30 AM UTC
Everyday investors are diving into the stock market like never before, and their bold moves are paying off—big time. In fact, they’re leaving the broader market eating their dust. But here’s where it gets controversial: while their favorite stocks are soaring, a surge in trading activity has experts sounding the alarm. Are these retail darlings becoming dangerously overcrowded?
Consider this: Citigroup Inc.’s curated list of 46 stocks most loved by non-professional investors—think companies like SoFi Technologies Inc. (https://www.bloomberg.com/quote/SOFI:US) and Riot Platforms Inc. (https://www.bloomberg.com/quote/RIOT:US)—has skyrocketed by 30% since early September. That’s a jaw-dropping performance compared to the S&P 500 Index (https://www.bloomberg.com/quote/SPX:Ind), which has only managed a 4.3% gain in the same period. Impressive, right? But this is the part most people miss: retail trading volume has hit an all-time high, according to a recent research note from Citigroup’s equity trading desk. And that’s raising eyebrows.
The Double-Edged Sword of Retail Trading
On one hand, it’s empowering to see individual investors take control of their financial futures and challenge traditional market dynamics. Platforms like Robinhood and eToro have democratized investing, making it easier than ever for anyone with a smartphone to buy stocks. But on the other hand, this frenzy of activity could signal a bubble in retail-favorite stocks. When too many investors pile into the same positions, it can lead to inflated valuations and, eventually, a painful correction.
Take meme stocks, for example. Remember the GameStop saga of 2021? Retail investors banded together to drive up the stock price, but the party didn’t last forever. Could history repeat itself with today’s retail darlings? And this is the part that sparks debate: Are retail investors truly outsmarting the market, or are they playing with fire?
What’s Next for Retail Investors?
As the market continues to evolve, one thing is clear: retail investors are no longer just spectators—they’re major players. But with great power comes great responsibility. Should regulators step in to protect inexperienced traders from themselves? Or is this the natural evolution of a market that’s becoming more accessible by the day?
We want to hear from you. Do you think retail investors are onto something, or are they headed for a wake-up call? Let us know in the comments below—this is one conversation you won’t want to miss!
