Five years after a band of online traders sent GameStop skyrocketing and upended Wall Street’s assumptions about “dumb money,” the influence of retail investors has proven more durable and long-lasting than many expected.

What began as a dramatic short squeeze in early 2021 has evolved into a persistent force in equity markets, reshaping trading dynamics, pushing hedge funds to adapt and providing a steady source of dip-buying flows of cash that helped underpin one of the longest bull markets on record.

“Retail investors were signals,” said Tom Lee, head of research at Fundstrat, whose flagship exchange-traded fund exceeds $4 billion in assets. “When they were buying dips, I knew the bull market was healthy. The post-2020 world looks a lot like it did in the nineties to me, which is that retail investors actually are really good at fleshing out good growth stories, and then they can do it with size and conviction. They are difference makers.”

Before the pandemic, retail trading accounted for only a small fraction of daily equity volumes in the U.S. That changed as lockdown-era government stimulus payments, zero-commission trading and social media-fueled coordination pulled millions of new investors into markets.

“People had assumed that once Covid cleared up, and everybody went back to their daily lives in whatever form that is, that this retail participation would secede and go back down,” said Steve Quirk, chief brokerage officer at Robinhood Markets. “What surprised me a little bit is how strongly it’s continued.”

On average, individual investor participation in U.S. equities has risen to nearly 20% of daily trading volume, up from low single digits before Covid, according to Jeff Shen, co-chief investment officer and co-head of systematic active equities at BlackRock.

“There is certainly a social aspect of it that is quite foreign to a classic hedge fund where there’s a lot of independence,” Shen said. “The social aspect makes this type of flow very correlated” among varying types of Main Street investor.

Quirk noted that on high-volume days, retail participation in equities could shoot up to close to 40% and, on the options side, as high as 50% of volume.

During the meme stock frenzy, traders flocked to online forums such as Reddit’s WallStreetBets, where ideas spread at a rapid pace and unprecedented scale. Figures like Keith Gill, known online as Roaring Kitty, emerged as focal points for a loosely coordinated community that shared research, trading strategies and a deep skepticism of Wall Street orthodoxy. The GameStop saga also left a mark on popular culture, inspiring the 2023 film “Dumb Money,” starring Paul Dano and Seth Rogen.

Far from being wiped out after the meme stock boom faded, retail investors have continued to deploy capital — propelling retail flows to fresh records in 2025, according to JPMorgan. The bank found inflows jumped nearly 60% from the prior year and were about 17% higher than the previous peak set in 2021, when meme stock trading was at its height.

“This is a new retail investor that is much more informed, much more engaged, has many more tools,” said Devin Ryan, senior analyst at Citizens JMP. “It’s not just democratization of access to the markets, but also of information.”

A drop in trading commissions in 2019, and the rise of fractional trading also helped open up markets ahead of Covid. A few decades ago, trading commissions were close to $100. By 2020, most brokerage firms had also added the ability to trade “fractions” of a share. That meant you could buy in dollar amounts versus needing to have thousands to get access to your favorite tech stock. And there were largely no account minimums.

Respect from institutions

Hedge funds and short sellers learned a painful lesson. Crowded bearish positions now carry greater risk in an era where retail traders can quickly mobilize capital and amplify moves.

“It’s just so great to see that dumb money moniker go away, and then to get respect from the institutions,” said JJ Kinahan, head of retail expansion and alternative investment products at Cboe Global Markets. “Professionals learned a lesson from the tenaciousness of the retail investors who believe in companies and continue to buy them.”

Many hedge funds have scaled back short exposure, diversified portfolios and invested heavily in tracking retail sentiment to avoid becoming targets of coordinated buying.

“To many professional investors, retail traders have become that annoying TV-series villain who never quite gets written out,” said Ivan Ćosović, founder of Breakout Point, a firm that tracks retail trader activity on discussion boards. “Now, five years in, it’s basically the fifth season of the show, and somehow they’re still in the cast.”

Retail investors’ dip-buying during key drawdowns like the tariff-induced sell-off in early April — along with the rush into the SPDR Gold Shares (GLD) — last year resulted in bumper returns that left Wall Street taking note.

In 2026, everyday investors have turned their attention to energy stocks following the U.S. strike on Venezuela and silver amid the metal’s monster run. Silver passed the $100 per ounce mark for the first time last week.

“They’re really, really savvy,” said Quirk of Robinhood Markets. “They bailed out the market during Covid, and they bailed it out again during the tariffs, they were aggressive buyers.”

To be sure, other volatile investing opportunities have popped up in the void left by pandemic-era short squeezes of stocks like GameStop and AMC. Demand for options and leveraged funds have boomed in recent years, while a new class of meme stocks including Opendoor and Kohl’s sprouted up in 2025.

But at exchange-traded fund manager Direxion, retail investors are using their high-risk levered instruments wisely, according to CEO Douglas Yones. Firm research shows mom-and-pop investors are typically devoting only a small portion of their overall portfolios to these speculative plays, while keeping most of their money in more traditional investments.

“The markets are playing into the hands of retail,” said Yones, a former executive at the New York Stock Exchange. “The volatility has been incredibly good for end investors.”

Wealth transfer

Retail’s influence is being reinforced by a favorable backdrop of rising stocks and a looming generational wealth transfer from baby boomers, a shift that is gradually putting more capital in the hands of investors comfortable with digital-first trading.

Household investors collectively control more wealth than institutional investors, Fundstrat’s Lee said, with roughly 76% of household wealth held by people over the age of 60, a demographic that has traditionally been less active in trading but increasingly influential as assets shift hands.

Lee added that about $120 trillion will be inherited by millennials and Gen Z over the next 20 years.

“Retail participation could get much, much bigger,” Lee said. “That’s four times the size of the U.S. economy. It’s more wealth than the entire net worth of China.”

Brokerage firms are starting to build tools to cater to these younger investors. They’ve overwhelmingly moved toward 24/7 trading, a hallmark of cryptocurrency markets which trade on nights and weekends. More firms are offering access to cryptocurrencies and crypto ETFs, while prediction markets are booming. There’s also been a rise in private-market offerings for average investors.

‘The greatest thing since sliced bread’

Already, data shows how much more skin young people have in the game. JPMorgan found 37% of 25-year-olds in 2024 moved “significant” sums from checking to investment accounts in recent years — a sharp increase from the 6% recorded doing the same in 2015.

Nick Wyatt, a 27-year-old auditor, is one of those Covid-era traders. With extra downtime during the pandemic, the Michigan resident researched and consulted a friend on how best to grow his spare cash saved from a part-time job in the market. Wyatt briefly tried day trading stocks as he began investing, but quickly decided to instead use a conservative, long-term strategy that includes funding a Roth individual retirement account.

“It’s the best decision I ever made,” said Wyatt, who has since gotten his fiancé into investing and used profits for a down payment on a home. “Compounding interest is the greatest thing since sliced bread. You can’t beat it.”

Correction: This story has been updated to correct quotes from Steve Quirk of Robinhood Markets and Tom Lee of Fundstrat.