Retail investors ditch buy-the-dip mentality during the market correction

cnbc.com:

Individual investors, whose assets are more tied to the stock market than ever, have abandoned their tried-and-true dip-buying mentality as the S&P 500 recently fell into a painful, 10% correction.

Retail outflows from U.S. equities rose to about $4 billion over the past two weeks as tariff chaos and mounting economic concerns caused a three-week pullback in the S&P 500, according to data from Barclays. During March's sell-off, 401(k) holders have been aggressively trading their investments, to the tune of four times the average level, according to Alight Solutions' data going back to the late 1990s.

«If people were trying to buy the dip and get their stocks on sale, maybe you would see people actually buying large-cap equities. But instead we see people selling from large cap-equities,» said Rob Austin, director of research at Alight Solutions. «So this does appear to be a bit of a reactionary trading activity.»

The increased selling came as American households are more sensitive than ever to the turbulence in the stock market. U.S. household ownership of equities has reached a record level, amounting to nearly half of their financial assets, according to Federal Reserve data.

Dip-buying had served investors well over the past two years as Main Street rode the artificial intelligence-inspired bull market to record highs. At one point, the S&P 500 went more than 370 days without even a 2.1% sell-off, the longest such stretch since the global financial crisis of 2008-2009.

But lately, markets began to sour as President Donald Trump's aggressive tariffs and sudden changes in policy stirred up volatility, stoking fears of dampened consumer spending, slower economic growth, weaker profits and maybe even a recession. The S&P