Retail Investors Are Doubling Down And Fear May Be Driving The Rally

Retail investors are pouring money into the market even as geopolitical risk rises and volatility creeps higher, a divergence that’s helping fuel the AI‑driven rally. Flows into U.S. equities have remained resilient, with retail traders continuing to buy dips rather than pull back, a pattern strategists highlighted at this week’s NYSE Creator Economy Summit. But beneath the confidence is a deeper question: What’s motivating everyday investors to lean in when the macro signals say caution?

Markets are rallying despite the ongoing war, and optimism around first-quarter earnings driven — particularly from AI-linked companies — appears to be adding momentum, Reuters reports. Retail investing behavior drives about 20% of total market activity, and retail investors seem to be leaning in rather than pulling back despite macro uncertainty.

This week, Bilal Little, director of exchange-traded products, invited me to attend the NYSE Creator Economy Summit to learn more about the markets from strategists, analysts and wealth managers, alongside other creators from around the country. The event brought ETF Central’s education platform to the forefront, a resource built to deliver real-time data, sharp insights and tools for investors navigating an increasingly complex ETF landscape. Six of the industry’s most influential issuers took the stage to share their market perspectives across thematics and sectors, leverage and income, crypto and AI, and more. An unmistakable energy around access and opportunity ran through the event, sparking my curiosity as a financial therapist about this shift in consumer behavior tied to retail investing.

Why “Don’t Panic” Still Dominates The Advice

The advice from the stage was conventional, with nuance added for today’s geopolitical and technological landscape. Max Gold of State Street Global Advisors — the firm behind SPY, one of the world’s most popular ETFs — said investors should “focus on long-term and diversification.” Seana Smith of Global X echoed that guidance, adding that it’s important to be “smart about where you are adding risk to your portfolio.”

Representatives from Direxion, YieldMax, Bitwise and VanEck rounded out the discussion, offering insights on trends and behaviors among retail investors and what access and educational resources are available. With the rise in social media-based financial education and the explosion of investing and trading platforms over the last decade, Michael Khouw of YieldMax put it plainly: “Retail does so well because it’s been beaten into them to buy the dip.”

I sat with this statement for a moment, considering its implications through both behavioral finance and trauma-informed lenses. It led me to ask myself a question:

Can retail investing behavior be attributed to fear?

Access Isn’t The Same As Safety

The ability for ordinary people to participate in equity markets and build wealth through instruments once reserved for institutional players represents real progress. That should not be minimized. As I stood on Wall Street, I quietly acknowledged that at one time, people bought and sold enslaved labor there. The foundation of this country’s wealth began with that labor. This was a building and a room that I — and others who look like me — were never intended to stand in.

I thought about my career in financial services, first in banking and later as a financial therapist bringing trauma-informed insights to conversations around financial education and equitable access.

I thought about how investing is embedded in the language of financial literacy, emphasized as a solution to closing wealth gaps and building generational wealth. While I stand firm in agreement with that charge under conventional perspectives on wealth building, I also know through observation that investing is the most prominent example of a fight response to the threat of money — a response we so often aren’t socialized to see.

Retail investor behavior appears to be shifting to ignore the macro uncertainty in favor of doubling down. In an assessment of two paths, the path of not investing feels more risky than continuing to buy the dip because, as Khouw noted, it’s been beaten into them to do so. This creates an interesting opportunity for investing-based educational platforms and educators who may not have a trauma-informed view of the behavior. They may encourage it without recognizing it as fear-based or safety-seeking rather than grounded intentionality.

The truth is, the market doesn’t care about your history or your education. From one perspective, that evens the playing field for anyone with $20 and a smartphone. It also creates an illusion of safety that, coupled with FOMO, leverage capabilities, crypto and AI volatility, and dopamine chasing associated with gamification or the display of quick wins on social media, can become a recipe for disaster — one that can lead to further financial trauma rather than fixing it.

Where Culture Meets Capital

None of this argues against markets, and it doesn’t suggest that retail investors should stay on the sidelines. The rally and earnings are real. The AI-driven growth story is driving real capital formation, and the opportunity for everyday people — especially those historically disenfranchised — is one worth pursuing. The event itself demonstrated a genuine effort to extend educational pathways and opportunities to connect with analysts and executives who might otherwise be out of reach.

Trauma-informed financial guidance, however, begins by acknowledging that people’s relationships with money are not neutral, regardless of what retail investor behavior demonstrates. Those relationships are shaped by history, family, race, class and every moment of financial stress a person has survived. Financial behavior often reflects the need to seek safety, power and freedom. If all signs point to investing as a beacon of hope, then the way that message is packaged becomes so compelling that sitting on the sidelines feels less safe than the alternative.

Trauma-informed literacy treats financial education not as the transmission of information, but as the slow rebuilding of trust.

If the exchange sits at the corner of culture and capital, then whose culture — and whose capital — is a question worth asking. And how can integrated media bridging the NYSE and the creators who were invited help define the generational moment we’re all witnessing?