Retail investors have had a gangbuster year in 2025.

Mom-and-pop investors bought the dip at key points this year, providing strong returns as the market climbed to all-time highs. Once thought of as unsophisticated and easily duped, a new breed of retail investor is giving the professionals who have long dismissed them a run for their money, according to investors and market data analysts interviewed by CNBC.

“Retail is just getting smarter, and they’re getting hardened to the market,” said Mark Malek, investing chief at Siebert Financial. In other words: These investors “really are growing up.”

Individual traders bought the dip at a faster clip during market drawdowns early in the year, according to JPMorgan quant analyst Arun Jain, who called it a “successful year” for this group. It was an effective strategy: 2025 is shaping up to be the second-best year since at least the early 1990s for dip-buying, per data from Bespoke Investment Group data published this month.

From May onward, JPMorgan said these investors shifted their focus from single stocks to ETFs. The group particularly dove into the SPDR Gold Shares (GLD) fund, with JPMorgan finding 2025 inflows topped the last five years combined. The gold-focused ETF has seen a record-setting surge of more than 65% this year amid the precious metal’s rise to all-time highs.

The result: retail investors’ single-stock portfolios have seen stronger profit-to-loss ratios than baskets tied to artificial intelligence and software run by JPMorgan, according to data from the bank released earlier this month. Everyday investors’ exchange-traded fund holdings had much higher profit rates than the SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust (QQQ), the firm found.

A significant driver of their strong performance this year goes back to a week in April that had investors of all sizes on the edge of their seats.

Big money ran for the hills as President Donald Trump first unveiled his plan for broad and steep tariffs on most foreign countries on April 2, which he dubbed “liberation day.” The S&P 500 briefly slipped into bear market territory as institutional investors worried the policy would drive up inflation and weigh on corporate earnings.

But retail investors jumped head first into the turbulence. They bought a record of more than $3 billion in equities on net on April 3 — even as the S&P 500 fell around 5% in the session, according to VandaTrack. Elevated buying continued the following day despite the benchmark average dropping another 6%.

Trump put most of his steepest duties on pause April 9, exactly one week after “liberation day.” Small-scale stockholders were on the ground floor of the S&P 500’s 9.5% surge that session. The broad index has climbed more than 21% since April 2. It’s on track to finish 2025 higher by more than 17% after hitting several new intraday and closing records.

“We often talk about retail as being sort of late to the party,” said Viraj Patel, Vanda’s deputy head of research. “But this has been the polar opposite.”

At Siebert, Malek said the professionals were starting to get nervous as the S&P 500 fell below 5,000 during the tariff-induced sell-off. But their retail traders continued buying all the way down, drawing on their past successes in increasing exposure amid pullbacks rather than panicking.

Retail investors “have been more right about the market and how to react to, certainly, a lot of the emotionally driven trades of the year,” Malek said. “They’ve been much more accurate in their dealings than my colleagues in the institutional space.”

Beyond believing in buying the dip, these traders also benefited from a conviction that the “TACO trade” would pan out, according to Zhi Da, a professor of finance at the University of Notre Dame whose research focuses on retail trader activity.

Known in full as “Trump Always Chickens Out,” this strategy encourages investors to buy into stocks when policy decisions from the White House cause market downturns, with the expectation that the actions will be reversed. On the other hand, institutional counterparts have been more cautious about trading around Trump’s policies, Da said.

He acknowledged there was some luck involved and that 2025 was an “exception” to the rule. Typically, retail investors buy market dips too late and don’t benefit as much on average, he said.

Retail’s positive 2025 comes years into the investing boom among everyday Americans that began during the pandemic. The next serious downturn in the market will test whether the elevated participation will last.

More than one out of every three 25-year-olds in 2024 moved significant sums from checking to investing accounts since they turned 22, according to JPMorgan data released earlier this year. That’s up from just 6% of 25-year-olds in 2015.

JPMorgan found 2025 retail flows surged to records, up more than 50% from last year and about 14% higher than the meme stock craze in early 2021. Individual investors’ share of total trades this year climbed to highs last seen during the short-squeeze mania four years ago, according to data from a working paper by professors at Chapman University, Boston College and the University of Illinois Urbana-Champaign.

The narrative during 2021’s meme stock surge — which centered on stocks like GameStop and AMC — was that retail investors made simplistic investing decisions to “stick it to the man.” Two years later, the sentiment toward these meme-stock era investors was captured in a film starring Pete Davidson, Seth Rogen and Sebastian Stan called “Dumb Money.”

Vanda’s Patel and others said that view is changing. Small investors are taking advantage of the widening access to market research and data — and getting a better reputation on Wall Street as a result, they said. Retail has also established itself as being more adept at buying at lows, increasingly putting them in the arena with bigger counterparts, Patel said.

“The average retail investor’s just becoming more and more sophisticated,” Patel said. “This year has been kind of a good testament to that.”