By 2025, individual investors have become not only an observable factor in financial markets, but also a decisive force. The sharp decline experienced with Trump’s tariff agenda at the beginning of April is one of the most striking examples of this. In just two trading days, $6.6 trillion was lost from US stock markets, making it the fifth largest two-day decline in the S&P 500 in history. However, this decline brought with it a familiar reaction, especially for individual investors: “Buy the bottom.”

Individual investors now prefer to buy instead of panic, and this has become a behavior rather than a strategy. Seeing declines as an opportunity has become an important habit adopted by investors since 2008. In fact, buying the bottom has worked many times to date. But the important point is that this time they did not just buy stocks, they also provided a serious inflow of money into the market.

Small investors in US stock markets have implemented the “buy the dip” strategy every time after the market crash in 2018, the Covid crash in 2020 and inflation concerns in 2022, and historically this strategy has generally been rewarded. Stocks fell, investors bought, and prices rose after a while. This cycle led investors to act with the philosophy of “this too shall pass.”

So, is there really a different situation this time? Although the resistance shown by small investors to market declines is a positive indicator for many analysts and investors, risks still persist in the macroeconomic environment they are in. As of the end of 2024, individual investors in the US had a total stock asset of $35 trillion, accounting for 38% of the total market. At the same time, according to Bloomberg Intelligence data, individual investors accounted for 19.5% of US stock trading volume at the beginning of 2024. This rate is well above the levels before the pandemic, and the impact of commission-free trading platforms is significant behind this.

One of the factors that shaped the buying-the-bottom behavior was the statements of political leaders towards the market. Perhaps one of the most interesting aspects of this period was that Trump constantly guided the markets with his “buy-the-bottom” messages. Trump encouraged individual investors by stating that he predicted market declines right on time, especially during trade wars and tariff uncertainties. This had a great effect. After Trump’s statements, Nasdaq gained 24% since the beginning of the year. However, there is an important point to note here: This rise was driven not by the big players of Wall Street, but by individual investors.

Institutional investors acted more cautiously during this period; they especially reduced their interest in big technology stocks. On the contrary, individual investors did not hesitate to take risks. So, what were these investors really counting on? The answer to this is based on both technical and fundamental data. The first quarter profits of S&P 500 companies came in well above expectations. Profit growth was 12%, well above market expectations. This increased the confidence of many investors, especially in big technology companies. Artificial intelligence-themed stocks have been one of the areas that have attracted the most attention from investors.

After stocks fell to rock bottom in April with US President Trump's tariffs, the index rose in May after the tariff environment softened, company profitability became strong, and macroeconomic fundamentals improved. During this period, some stocks performed much better than the index. According to CNBC Pro's data, some S&P 500 companies have given their investors a golden age since Trump's statements.

Here are the stocks that have gained the most in the recent recovery period: NRG Energy (NRG), Microchip Technology (MCHP), Palantir Technologies (PLTR), Monolithic Power Systems (MPWR), First Solar (FSLR), Seagate Technology (STX), Constellation Energy (CEG), Western Digital (WDC), Vistra (VST), GE Vernova (GEV), Tesla (TSLA), Mosaic Company (MOS)

While the buy-the-dip strategy has historically been successful, any successful strategy can create overconfidence over time. For example, the dot-com bubble victimized many investors in the 2000s. During that period, individual investors bought when the market was falling, but instead of rising this time, the Nasdaq failed to reach its previous highs for 15 years. This created a major rupture in investor psychology, and the share ownership rate of individuals dropped from 21.3% to 13.8%.

Today, individual investors are more experienced and prepared. However, every dip still carries its own risks. The possibility that macroeconomic factors such as high interest rates and unemployment concerns will put pressure on the market in the future is still on the table. This could mean a potential sell-off for the market. The Fed's interest rate policy continues to create uncertainty in the market for now. The markets postponed the interest rate cut they expected at the June meeting to the July meeting and then to the September meeting.

Individual investors have become one of the strongest players in the market in recent years. On the other hand, whether the "buy the dip" strategy is sustainable in the long term is still a big question mark. This strategy can usually be successful when applied at the right time and with the right stock; however, it is important to remember that not every decline is an opportunity.

Individual investors rely on this strategy, which has become a strong habit, and have made the right decision many times. However, markets do not always work the same way. And not every strategy that has won in the past will yield the same results in the future. Therefore, the striking point is how investor behavior can have major effects on the markets and that the “buy the dip” strategy should become a strategy shaped by macroeconomic and sectoral developments rather than a psychological habit.

Yes, buying the dip can still be a strategy, but it has become critical for investors to open their eyes and not just “get used to it” but also to do risk management and fundamental analysis. The issue for investors is no longer when to buy, but why to buy. And if you don’t have a solid answer to this question, habits can mislead you.

The information, comments and recommendations contained herein are not within the scope of investment consultancy. Investment consultancy services are provided within the framework of the investment consultancy agreement to be signed between brokerage firms, portfolio management companies, banks that do not accept deposits and customers. The comments in this article are only my personal comments and these comments may not be appropriate for your financial situation and risk return. For this reason, investments should not be made based on the information and comments in my articles.